Lack of spare parts may hinder Chinese car market recoveryApril 17, 2020
As China’s car factories recover from stops caused by an outbreak of coronavirus, they face a new headache: a potential shortage of spare parts.
The virus is currently causing production disruptions in Europe, North America, and Japan, which supply critical components for car manufacturers in China, the industry’s largest market. The risk group includes global automakers such as Tesla and BMW, as well as local manufacturers, including the Guangzhou Automobile Group and Zhejiang Geely Holding Group, which may face interruptions if the pandemic drags out.
These concerns are a reminder that economic activity in any particular country is unlikely to return to normal until the outbreak is brought under control around the world. With the suspension of car production in Europe and America, problems in China could affect the only large manufacturing region where businesses grow, which could hinder the recovery of the world’s second largest economy after months of paralysis.
Last year, China imported $ 36.7 billion worth of automotive components, with Germany, Japan, and South Korea accounting for 28%, 27%, and 6% of the total, respectively, according to data from the China State-sponsored Automotive Research Center. The United States took fourth place, accounting for 5.9%.
Geely, a leading Chinese car manufacturer and owner of Volvo Cars, said the potential shortage of imported components had little impact on production. This prompted the company to switch to Chinese suppliers.
Guangzhou Auto, whose partners are Toyota and Fiat Chrysler Automobiles, said it is taking steps to ensure supplies, as the company imports up to 10% of its components from overseas for assembly in China.
Although some automakers in China say they rely almost 100% on local supplies purchased in the Middle Kingdom parts they buy, they may still contain smaller imported components, such as chips. This means that almost all car manufacturers may suffer from supply problems.
Of course, in China there has still not been a significant shortage of spare parts, and component suppliers in Europe and the United States are preparing to resume production in a timely manner, said XAM from CAAM at an online press conference on April 10. The German government is negotiating with car companies to find a way to resume production, and industry groups in countries like France are waiting for the green light to resume production.
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