By on February 13, 2020

Not that there’s ever a good time for a global pandemic threat, but the coronavirus currently sweeping through Asia really could have scheduled itself more conveniently. China was already in the midst of an economic downturn when the virus reared its ugly head, with the country’s automotive sector having just moved backward for the second year in a row. The outbreak, centered in the Hubei province’s capital of Wuhan, is guaranteed to worsen the issue.

Responsible for about a tenth of China’s automotive manufacturing power, the region has basically gone dark since the outbreak picked up steam late last month. Over 50 million people are now presumed to be under house arrest due to the Chinese quarantine. Forbidden from going outside, they’re hardly likely to risk infection and government ire just to put for a few hours at their local factory. They also aren’t going to run out to their nearest dealership to support the ailing economy — but that’d be the first place to go after the sequestration ends.

If I were in their shoes, I certainly wouldn’t be taking the bus for a while.

The Wall Street Journal has the undeniably bleak figures:

Sales in January are estimated to have dropped 18 [percent] from the same period a year ago to 1.94 million vehicles, the government-backed Chinese Association of Automobile Manufacturers said Thursday. The association released an estimate since some companies couldn’t submit data amid the virus outbreak.

But the worst likely has yet to come: Sales will decline by around 40 [percent] in the January-to-March period from a year earlier, with production volumes falling by up to 60 [percent], research firm Jefferies said.

The setback finds the industry still reeling from last year’s 8 [percent] sales drop. Auto makers sold 25.8 million vehicles in China in 2019, a decline of more than three million from 2017, the industry’s best year to date. Even before the coronavirus crisis, the manufacturers’ association said sales would fall again this year, by 2 [percent].

This week, Hubei’s provincial government said companies could not resume work before February 21st unless they dealt specifically with infrastructure, medical needs, or providing food. But that’s not to suggest Feb. 21 will be the day auto factories flip the lights back on.

While media outlets previously claimed authorities had begun to get a handle on the virus, China’s National Health Commission recently released new research suggesting the standard 14-day quarantine period might not be enough to contain the spread of the virus. The incubation period may actually be 24 days, meaning a large number of infected people may have slipped through the quarantine.

The Centers for Disease Control and Prevention says it’s still operating under the 14-day assumption, saying there is more than enough data to assume it’s effective. Of course, the CDC also mistakenly released someone infected with the virus from a San Diego hospital over the weekend — it’s not omniscient.

This all means we’re left to guess when this beast will die down. Obviously, the outbreak will continue rippling through the global market as supply chains and business meetings are disrupted. American manufacturers put the kibosh on all travel to China shortly after the coronavirus made headlines, and most foreign automakers operating in the region asked employees to stay home before government quarantines came into full effect.

As for supply issues, Hyundai reported parts shortages almost immediately, stalling domestic production as it sought out new suppliers. Kyungshin, the company that furnishes the automaker with the brunt of its wiring harnesses, has tried to get back into the saddle to make up for virus-related shortfalls, though Reuters reports only about half of its employees actually returned to work. Many may still be fearful of contagion (even though they’re outside of the Hubei lockdown) and some may actually be under house arrest for showing coronavirus-like symptoms, which aren’t all that different from your typical cold — making the response a lot harder to manage.

[Image: IHOR SULYATYTSKYY/Shutterstock]

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21 Comments on “Coronavirus Infects Chinese Auto Market, Supply Chain Problems Persist...”


  • avatar
    Pig_Iron

    Incubation of 24 days, aerosolized 7.5 meters away, can enter ocularly, can survive on a surface for 9 days . . . This isn’t over by a long shot, and don’t expect a vaccine for 18 months. When they tried the SARS vaccine, it made the immune system go haywire and attack everything, it actually killed some kids. :-(

    • 0 avatar
      brn

      Your claims differ from everything I hear about the virus.

      Best I can tell, the regular flu is quite a bit more dangerous. It certainly kills more.

      • 0 avatar
        Hummer

        Regular flu kills about 0.164% of people infected, so far Corona virus is killing 2.1% and is spreading significantly faster than any typical flu.

        Certainly China is scared as we see from the multitude of videos coming out of men in white suits ripping people from their homes and cars to be taken to who knows where.

        • 0 avatar
          Lou_BC

          SAR’s mortality rate was up around 8%. Corona currently is comparable to the Spanish flu that occurred the beginning of the 19th century. Epidemiologists state that for every known/reported case of corona virus there are 8 – 10 unreported cases. It does appear that the majority of deaths have occurred in patients with significant commodities (they already have some other life limiting illness).

      • 0 avatar
        Pig_Iron

        @brn
        Per the Los Alamos National Laboratory,the Ro is likely to be between 4.7 and 6.6. :-(

  • avatar
    -Nate

    Hoo boy ~ another pandemic .

    -Nate

  • avatar
    dont.fit.in.cars

    Years ago I read a book Plagues and People by William H. McNeill.

    It relayed if Chinese administrator in the 1500’s wanted to remove a rival, he had him transferred 400-600 miles south. Within six months the rival would be dead due to his immune system being overwhelmed by local flu.

  • avatar
    TimK

    There are stories of companies “going back to work” and it’s not surprising that workers might be reluctant. In one case 200 employees showed up for work, one exhibited symptoms, tested positive, and now the whole lot is under quarantine. Who wants to be next?…

  • avatar
    Whatnext

    And now the full folly of having your supply chain dependent on China is exposed.

    • 0 avatar
      brn

      NEVER put all your eggs in a single basket. I get that’s not entirely true with China, but close enough. Diversity in manufacturing is a good thing.

      • 0 avatar
        RHD

        GM’s production lines are about to go quiet. Ford’s as well, as Mustang transmissions are not long to run out.

        With any luck, we’ll be less flooded with crummy, cheap Chinese tires for at least a little while.

    • 0 avatar
      Superdessucke

      What? Make your supply chain dependent on a country with a repressive communist regime and third-world wages and working conditions and few environmental standards? What could possibly go wrong?

      I believe I have posts on this going back several years.

    • 0 avatar
      -Nate

      “And now the full folly of having your supply chain dependent on China is exposed.”

      Yabbutt ~ it’s CHEAPER and there’s never any quality issues, right ? .

      -Nate

  • avatar
    Right_Click_Refresh

    Yawn.

  • avatar
    thornmark

    read that dealership traffic is off 70%

    but then again, China

    seems the manufacturers who didn’t waste billions in US profits in China are doing better than the ones that did

  • avatar
    EBFlex

    I think every media outlet that contributes to the hysteria over this non-story should be heavily fined.

    The flu is FAR more deadly and FAR more widespread.

    Calm TF down.

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