Subaru Extends Shutdown, Cites Unpredictable Chinese Supply Chains

Matt Posky
by Matt Posky
subaru extends shutdown cites unpredictable chinese supply chains

Subaru is joining the long list of automakers closing shop on account of the coronavirus. Japanese production is being suspended at the automaker’s main plaint in the country’s Gunma prefecture from April 11th through the first of May. It’s also idling the Oizumi engine facility as it announces plans to extend the suspension of its U.S. facility in Indiana. The plant will now be idled through April 20th.

While some of the closures are due to social distancing obligations, the rest is down to parts allocation. Subaru is heavily reliant on components manufactured in China, and it’s still not clear how things are actually going there. What is clear is that Subaru (and plenty of other manufacturers) can’t do without its robust industrial sector operating at full strength. Subaru CFO Toshiaki Okada said in February that “it’s impossible to manufacture cars without China.”

Like most Japanese manufacturers, Subaru is being negatively affected by supply chain breakdowns stretching back to when COVID-19 first emerged in China’s Wuhan province. While the People’s Republic is now supposed to be in recovery, according to its own state-backed media, its national leadership expelled U.S. journalists two weeks ago at a time when reliable information was already difficult to come by.

Officially, China has managed to put a cap on the coronavirus, though estimates from Wuhan citizens speaking to Radio Free Asia suggest the death toll and infection rate were much higher than claimed — referencing the large number of urns being delivered to funeral homes and crematoriums as circumstantial evidence.

While the World Health Organization (WHO) supports China’s official coronavirus headcount, that body faces growing criticisms for initially claiming there was no reason to enact travel restrictions — something all countries have since done to curtail the virus’ spread. Bruce Aylward, senior advisor to the Director General of the WHO, also refused to recognize Taiwan as a sovereign nation in a recent interview (before later suggesting it was part of China).

This calls the legitimacy of both China and the WHO’s COVID-19 estimates into question, making it more difficult to predict how the recovery is actually faring in the PRC. Japanese automakers are still noting supply chain issues stemming from factory closures, with some reopened Chinese facilities reportedly operating with a fraction of their normal staff.

Mazda, Mitsubishi, Nissan, Subaru and Toyota have all enacted factory suspensions in Japan. Some of those are in response to localized health concerns aimed at slowing COVID-19’s spread. Others, however, are the direct result of supply chain problems with China and uncertainties as to when components can be reliably sourced from the country. On Monday, vice industry minister Xin Guobin said China’s manufacturing output had returned to between 70 to 90 percent of its normal strength. Still, in the same announcement he also warned other nations to prepare for rather serious supply chain hardships (especially in relation to exports) over the coming weeks.

Japanese automakers have already established the New Coronavirus Countermeasures Automobile Council to contend with virus-related complications. While its primary mission is mitigating COVID-19’s spread through the industrial sector, it also places a strong focus on figuring out how to help car companies navigate supply problems. Even if China has turned a corner, supply chains will take a while to catch up, with a lingering gap in consumer demand.

[Image: Subaru]

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  • Luke42 Luke42 on Apr 02, 2020

    "Subaru is heavily reliant on components manufactured in China, and it’s still not clear how things are actually going there." The job I started in January involves dealing with Chinese suppliers. When you have a question like this, you pick up the phone and ask. It's not some big mystery. Yes, you have to be aware of timezones and talk to someone in your supply chain who speaks English, but these folks have their customer service hat on and you're the customer. The fact that it's China doesn't change much, because we're all in this to sell things and make money. I trade emails with engineers and managers in Chinese factories every day. Chinese factories do very dramatically in how much they have their stuff together -- but world-class business all operate pretty similarly across the world. Communicate, navigate, aviate. It's not rocket science, but your priorities in the office is the reverse of your preferences in the cockpit. (In the cockpit, you aviate first.)

  • Conundrum Conundrum on Apr 03, 2020

    "Mazda, Mitsubishi, Nissan, Subaru and Toyota have all enacted factory suspensions in Japan." Who writes this horse manure? Subaru doesn't have a factory in China. Never has had. Oh, I see, it's the same person who informed us Chinese medicine was in the Stone Age, and that their buildings fell over in a light breeze. Right, that authority. And then I get to read the usual American hate against China in the commentary by dopes who haven't got a clue, who forget it was their own corporate people who fell over themselves yanking jobs out of the USA to get product made in China -- cheap. But does logic or memory ever prevail? Not on your nelly. I get fed the same nonsense the US government puts out to its brainwashed citizenry and swallowed whole. Not a surprise - Canada repeats US foreign policy and feeds it to me too, but I don't fall for most of that crap. And I'm not even a Chinaphile myself, but hell, I can tell truth from fantasy. China has treated Canada like complete sh!t on numerous issues, mostly over bogus claims about the quality of our grain and meat exports, but so has the US, with the Mango Mussolini claiming Canadian steel and aluminum exports were a national defence issue or some utter claptrap. And now the US has commandeered a planeload of M95 masks from China that was going to France. With friends like that ... and a health system like that. If anyone with a memory existed amongst the august band who write for TTAC, they'd recall Subaru was denied a license to build a factory in China. They waited too long and then the Chinese decided that Toyota's 16.5% of Subaru at the time meant that Toyota owned Subaru, so denied the application. Gee, that ranks right up there with the illogical commentariat brainpower here -- link below for the truth of the matter. There is NO Subaru China factory - they buy stuff for their CVTs from Schaeffler, a German outfit, with guess what? A factory in China. And no doubt Subaru sources their their intrument panels and various other parts there like piston rings from "international" suppliers. Just like everyone else. Toyota is also saying its Japanese factories are facing a shortage of Chinese parts and may have to halt production. There is this Japanese business website called Nikkei, you know, among others. FCA in Serbia can't make more of its ugly-as-sin Fiat 500L "cars" in Serbia due to lack of Chinese parts, either.

  • Tassos SNAAB shot itself in the foot when it BASTARDIZED its unique brand by BADGE ENGINEERING its vehicles with GOD DAMNED GM, OPEL, CHEVY, LANCIA and who knows what other automotive RIFF RAFF. I know of no Saab Enthusiast (they do exist) who felt sorry when the stupid maker went BANKRUPT.
  • 28-Cars-Later Example is located in Coldwater Michigan, so..." needs work -- including new brakes."Brakes, brake lines, probably fuel lines. Probably should hit the master cylinder too unless there are seal only kits for it."It has an automatic transmission."Likely needs a new one of those as well."an exhaust leak"Add an exhaust to the list."an inaccurate speedo."Wow and TMU to boot!These days five to six bills isn't too horrible but this example could turn into a headache really quick due to parts availability. The right buyer for this is a small time tradesman, the HVAC guy who was just leaving my house is rolling a late P80 Volvo 850 sedan in manual which he treats like a truck. Said he'd love a wagon if he ever came across one... if you're local to Coldwater Michigan this is a nice work beater. Annual inspection/registration tax probably costs nearly as much as the car.
  • 2ACL Amazing price, but that's (IMO) a reflection of the interest in an old 2.0T repmobile made interesting only by being a wagon. The Epsilon 9-3 was a sanitized take on the Saab formula. That's not to say it lacks interesting variants, but this isn't one of them. If it had a stick, maybe. But this generation's automatics are sealed and known to become temperamental if not serviced. If the owner can't provide proof of regular servicing, run.
  • Tassos The 3 lt turbodiesel should be FAR, FAR more efficient than the 6.2. ANything that walks would be more efficient than the 6.2. Are you kidding me?The 3 lt turbodiesel in my 4,000 lb+, 208 HP, 400+ LBFT E320 Bluetecs is more efficient than even the 2.2 lt ICE with its meager 125 HP in my 1990, only 2,822 lbs, Accord Coupe 5 speed LX. 100%. I have the full detailed records to prove it beyond any doubt. I consistently get over 35 MPG HWY, which I never got with the Accord (usuallt 32-33 tops)The big question is, will GM ask $5k more for the diesel than for the gas version, as usual? Mercedes only asked $1k m ore for the diesel, $51k vs $50k for the gas back then, which you would recover in just ONE YEAR of average miles driven.
  • Cprescott Lucid has the right idea about building cars - I agree that these have a presence to them and certainly make all Teslas look like cheap golf carts with doors in comparison. I hope Lucid survives because they actually build luxurious products and not pretenders like Tesla.