Coronavirus Threatens to Disrupt Automotive Industry Beyond Formula 1 Race Dates

by Michael Satterfield

News about the cancelation of the Chinese Grand Prix has been sweeping through the automotive press, the race scheduled for April 19th has been postponed indefinitely. Formula 1 and FIA have not announced when or if there will be a makeup date for the race. With the infection spreading across China and neighboring countries the repercussions to the automotive industry stretch far beyond the canceling of a GP race as China is not only the largest producer of passenger cars and components but also the largest market for new cars in the world.

With China manufacturing, nearly 25 million cars annually and supplying parts and finished vehicles for markets around the world, the shut down due to the Coronavirus is having a ripple effect across the automotive industry. Toyota, Kia, and Hyundai are keeping factories in China closed much of the month of February and manufacturers like Honda with factories in the Hubei province, where the virus originated, are closed until the pandemic passes. According to S&P Global Ratings, the Coronavirus outbreak could cause automotive production to drop by as much as 15% for the first quarter of 2020.

According to automotive expert Lauren Fix, one of the biggest issues is the ripple effect in the supply chain for companies like Ford Motor Company, General Motors, and Kia. As many components for assembly factories around the world rely on Chinese factories to keep the assembly line moving. While many companies are shifting component manufacturing to suppliers to other countries like India, the downtime may put additional strain on already struggling brands.

These impacts are so dramatic that you're gonna see, maybe not today, but let's say they started production back up on the 14th-17th (of February) like a lot of manufacturers are hoping for, you're still going to see a pipeline problem. That it's going to take time to get everything back up and running. Typically you are looking at a three-month variance, so three months down the road we might see a shortage of components for cars being assembled.
Lauren Fix told RT on February 11th

The coronavirus has killed more than 1,100 and infected over 45,000 people worldwide with the vast majority in mainland China. China is attempting to contain the virus and claims that the infection rate is showing signs of slowing. To keep the Chinese economy from collapsing under the decreased productivity, President Xi Jinping ordered sweeping economic reforms that include tax cuts, rent reductions on state-owned properties, requiring banks to freeze interest rates. The government is also hinting at a stimulus package to keep the economy on track through the crisis. Auto manufacturers like Toyota and Kia have petitioned the government to reopen factories outside of Wuhan as soon as February 16th.

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