Association head says tallies in first two months could be down 20 percent year-on-year
Volkswagen's booth at the 2019 Guangzhou auto show exhibits the pure electric vehicle e-Golf. (LI FUSHENG / CHINA DAILY)
China's auto production and sales may suffer if the coronavirus outbreak continues to spread across the country, said experts and company executives, but the scale of impact is too early to determine.
Few people are visiting dealerships in recent days and production has been stalled as Chinese authorities have extended the Spring Festival holiday to curb the coronavirus that has infected more than 14,000 people and killed over 300 across the country.
China's most popular international carmaker Volkswagen AG said on Sunday that its joint ventures with Jilin province-based FAW Group and Shanghai-headquartered SAIC Motor will follow the schedule of local governments and they will not restart production before Feb 10.
We are also in the early stages of understanding if and to what extent we may be temporarily impacted by the coronavirus
Zach Kirkhorn, CFO of Tesla
BMW, Toyota and Ford said their plants will be closed until Feb 10 as well. Carmakers in Wuhan, capital of Hubei province and epicenter of the coronavirus, including Dongfeng's joint ventures with Renault, Honda and PSA, said no decision has been made on when production might resume.
Hubei, especially Wuhan, is a manufacturing and transport hub. Last year, the province produced 2.24 million vehicles, accounting for nearly 9.9 percent of total production in the country, according to the China Passenger Car Association.
Cui Dongshu, secretary-general of the association, said vehicle production in February will take a huge hit, and sales in China during the first two months of 2020 will fall by at least 20 percent year-on-year.
But Cui said there will not be much negative effect in the long run. He noted the 2002-2003 SARS epidemic had little long-term impact on China's passenger car market, which saw sales surge 70 percent year-on-year in 2003.
Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said the market is much more developed than 17 years ago and less likely to rebound. But it should return to normal when the coronavirus is contained.
The association estimated in December that China's auto market would fall by 2 percent year-on-year in 2020. It had fallen for two years in a row in 2018 and 2019.
Joseph Massaro, CFO for auto technology supplier Aptiv, expected China's auto production in the first quarter to slide about 15 percent while full year production would fall 3 percent.
BMW displays its all-new X4 M model at the Shanghai auto show last year. (LI FUSHENG / CHINA DAILY)
Massaro made the remark in an earnings conference call on Thursday, but he said delayed production could be made up in the second quarter. "We don't view this as a full-year issue at the moment," he said.
German auto supplier Bosch has 23 automotive manufacturing facilities in China and two in Wuhan. All of them are closed during the extended Spring Festival holiday.
"We're monitoring how the situation develops to see if production might be down for longer," CEO Volkmar Denner told reporters on Tuesday in Stuttgart, Germany. "We're concerned."
Tesla Inc is expecting a seven to 10-day delay in the ramp-up of the Model 3, which is being built at a recently launched Shanghai plant, according to CFO Zach Kirkhorn.
Kirkhorn discussed the impact of the disease on Tesla's operations in China during the company's fourth-quarter earnings call on Wednesday.
"We are also in the early stages of understanding if and to what extent we may be temporarily impacted by the coronavirus," he said.
Kirkhorn added the virus may slightly impact profitability in the first quarter.
The outbreak could also hit profits at Jaguar and Land Rover, parent company Tata Motors warned on Thursday.
The epidemic is raising concerns that thousands of Chinese factory workers may struggle to get back to work next week because of extensive travel restrictions.
The Indian carmaker said the outbreak could impact its profit margin forecast of about 3 percent for the JLR unit in fiscal 2020, at a time when it was making progress on a turnaround plan to improve sales in China.
Canadian supplier Magna International said it is taking several precautions, including lengthened plant closures at its China-based facilities. Magna operates 68 facilities in China, including those used for manufacturing and engineering. The facilities combine to employ nearly 19,000 people. Two of the company's facilities are in Wuhan.
"Magna is closely monitoring all available information from the World Health Organization, the Center for Disease Control as well as public health authorities in various countries, inside and outside of China," Magna spokeswoman Tracy Fuerst wrote in a statement.
"Our internal health and safety team is coordinating information and resources related to the outbreak, with our primary focus on the wellbeing of our employees."
Reuters contributed to the story.
