By on January 30, 2020

GM

Just as airlines around the world cut ties with China, automakers who do business in the coronavirus-hit country are scrambling to deal with the outbreak — delaying production, keeping employees at home, and crossing their fingers.

Any predictions that 2020 would be a better year than 2019 — a potential springboard year for automakers busily tailoring their lineups to better serve the rapidly evolving Chinese market — are now due for revision.

As the virus spreads throughout China (as of Wednesday, illness was reported in every region, but it remains centered in the country’s manufacturing heartland), automakers are being spurred into action.

Three days ago, the Detroit Three automakers all announced travel restriction to mainland China, with Fiat Chrysler banning all outside travel to the country. General Motors said only critical business decisions could get its executives on a flight, and even, then there’d be screening in place for the individual. Ford banned all travel to the outbreak’s epicenter, Wuhan.

The continued spread of the disease, the locking down of several population centers, and Wednesday’s raft of airline announcements should bring most travel into China to a halt. Luckily for companies, the country is currently celebrating its Lunar New Year, with the holiday scheduled to wrap up February 2nd.

What happens then is still a work in progress. Travel restrictions within the country could keep workers who left home for the holiday away from their workplace, and several jurisdictions have elected to just extend the holiday.

As reported by Automotive News, Volkswagen — a major foreign player in the Chinese market, plans to keep Beijing employees home for two weeks; its two joint ventures won’t restart production until February 9th and 10th, respectively.

BMW Group chose to extend the holiday until Feb. 9, assuming many workers wouldn’t be able to make it into work. A government-imposed shutdown will also see Tesla’s new Shanghai Gigafactory idled for at least another week and a half after the official end of the holiday. Ford, on the other hand, plans to have its joint venture plants up and running ASAP.

GM’s presence in the country is vast, and one of its facilities resides in Wuhan. Its Chinese factories won’t come online until Feb 9. The same goes for Toyota. According to BBC, PSA Group, Nissan, and Honda have announced plans to evacuate staff and their families.

For suppliers, the situation is no different. Parts giant Magna said it would idle its numerous plants for an unspecified period of time.

The outbreak, which could be just getting underway, will undoubtedly impact a market whose new vehicle sales were already predicted to contract a further 2 percent in 2020. Last year saw the country’s sales fall over 8 percent, continuing a trend that began in 2017. Of the Detroit Three, GM’s Chinese business fared best in 2019, which isn’t saying much. Sales sank 15 percent for the year — a far better result than Ford’s 48-percent drop and FCA’s 41-percent decline.

[Image: GM China]

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22 Comments on “Virus Doesn’t Bode Well for an Already Ailing Market...”


  • avatar
    redapple

    Gone from bad to worse.

    WHO declaration 2 hrs ago.

    • 0 avatar
      highdesertcat

      It’s the people-to-people-direct contagion factor that concerns the specialists. Walk through someone’s cough or sneeze who is a carrier and chances are good you’ll get it too. Can’t afford that at my age. That’s why I follow the sun.

      I guess we’ll stay in El Paso until this thing blows over. And it will. But with an incubation time of 10 – 14 days, it could take a long while before the all-clear is sounded.

  • avatar
    Lou_BC

    I work in healthcare so the reports I’ve been provided indicate that it isn’t nearly as deadly as SARS or MERS. I’ll add a few tidbits to put it all in perspective. The most current data in Canada indicates that the current flu has sent 802 people to hospitals and killed 13. In the USA, they have had 120,000 hospitalizations and 6,600 deaths. The questions asked should be why the differences between Canadian and American flu statistics. The USA statistics are much worse than Canada’s even when you factor the 10x difference in population size.

    • 0 avatar
      Hummer

      Population density in contiguous USA is 103 people per square mile, while Canada’s population density is 10 per square mile. That’s likely a large contributing factor.

      • 0 avatar
        Lou_BC

        @Hummer – Your numbers are an average. 90% of the Canadian population lives withing 100 miles (160 km) of the USA border. That is where our biggest cities are located.
        I live in a region where the population density is 300,000 people for 600,000 sq.km. (231,661 sq.miles). That works out to 1.3 people per square mile. Vancouver on the other hand has 5,400 people per square kilometre or 13,591 per square mile.

  • avatar
    cprescott

    The American company that could be hurt the most is Government Motors. They funneled upwards of $2 billion in taxpayer funds to expand their Chinese penetration and now they are so vulnerable. Their sales growth has almost entirely been Chinese and Cadihack is particularly ill-equipped to handle this since every bit of Cadihack sales growth since 2009 has been Chinese sales. Buick will be harmed also since it is almost entirely a Chinese brand since an overwhelming amount of their product is sold in China.

    And yes, this will be delicious to see this company sink.

    • 0 avatar
      Lou_BC

      “Chinese penetration” … interesting choice of words since you obviously would like to see GM get screwed ;)

    • 0 avatar
      FreedMike

      …so, when the company sinks, hundreds of thousands of people – company employees, dealers and all their employees, plus all the folks who work for their suppliers – get banged out of jobs, and you’ll find that “delicious”?

      The problem with this whole “let ’em fail” capitalism is that it isn’t capitalism at all. It’s more like schadenfreude, all to prove some silly argument that makes someone feel better about himself.

      Sorry, there are real costs to watching companies fail. It shouldn’t be enjoyed.

      • 0 avatar
        Blackcloud_9

        @cprescott should want to have GM stay afloat. That way, he can keep using clever and catchy words like “Government Motors” and “Cadihack”.
        However, if GM goes under like cprescott so salaciously wants, he can always fall back on “Toyoduh” and “Honduh”. Those are really high on the clever-scale as well.
        Sheesh.

    • 0 avatar
      JimZ

      So what cramped, smoky room in Russia are you posting this crap from?

    • 0 avatar
      Bill Wade

      “And yes, this will be delicious to see this company sink.”

      It’s rather disturbing anybody would want an American company employing our fellow citizens to sink. :(

    • 0 avatar
      redapple

      CPR….
      With more vitriol, you could morph into the new DEADWeight since he s gone.

    • 0 avatar
      dukeisduke

      As Bugs Bunny would say, Bon Voyagee!

  • avatar
    dusterdude

    This is bad for all auto OEMs, some more than others ( ie German based OEMs along with GM) as they derive a significant portion of there profits from China. More importantly this is a serious human crisis. Hopefully the infections will peak then begin subsiding before too long ..

  • avatar
    Right_Click_Refresh

    Wife and I had it(still recovering). Weakest “flu” ever. Another OMG WW3!!! moment of overhype. Will be forgotten in a month. The usual.

  • avatar
    dukeisduke

    So I guess this would be a bad time for Toyota to re-introduce the Corona?

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