Logistics, Health - Coronavirus Could Shut Global Auto Industry
The spread of the 2019-nCoV Wuhan Coronavirus could impact manufacturing all over the world, especially in the auto industry.
That's because of the massive supply china of the Chinese auto parts industry, much of which starts in Wuhan City and the surrounding Hubei Province. China exports about US$70 Billion worth of auto parts and accessories globally, with roughly 20 percent going to the United States. Nissan, Kia, Peugeot, and Honda all have manufacturing facilities in the area, both producing cars and shipping out parts.
But no matter where a car is built, you can't build a car with only 99 percent of its parts.
"It only takes one missing part to stop a line," said Mike Dunne, a former GM executive and an auto industry consultant with the firm ZoZoGo. "The reality is that no one knows how this will play out" over the next few weeks, he said.
Hyundai reportedly will suspend production in its South Korean plants because of a shortage of Chinese-made parts. Even European car manufacturers like Volkswagen and BMW could see a dip of 5 percent in their earnings for the first half of 2020. Fiat Chrysler said it has one European plant at risk from the lack of Chinese parts in the next two to four weeks.
"The greatest threat is that the virus whacks consumer confidence - which is already shaky as a result of the slowing Chinese economy and U.S.-China trade tensions," said Mr. Dunne. "Weak demand for new cars means idle factories, which could lead to job losses."