ASSESSMENTS

China's Virus Outbreak Has Dented Its Automakers' Bottom Lines

Feb 20, 2020 | 10:00 GMT

This photo shows workers at Dongfeng Motor's joint venture with Honda in Wuhan, China.

Honda's joint venture with Dongfeng Motor Corp. in Wuhan, China, shown in this 2019 photo, is one of several auto manufacturing and parts plants in the city and Hubei province idled by the coronavirus outbreak.

(STR/AFP via Getty Images)

Highlights

  • The outbreak of coronavirus has damaged China's hopes that its struggling auto sector would rebound.
  • Although many Chinese auto factories have resumed operations since the New Year holiday, Dongfeng Motor Corp. — a major manufacturer for China's domestic market — relies on manufacturing centered in Hubei province as part of its supply chain.
  • South Korean automakers depend heavily on the flow of Chinese-made auto parts. Should the coronavirus outbreak continue to spread in China, corresponding shutdowns would significantly affect (or even halt) much of its auto manufacturing.

China’s deadly coronavirus outbreak has left few of its economic sectors unscathed, but the effects of shutdowns on its auto manufacturing operations have been -- and will continue to remain -- especially acute. Hubei province, the epicenter of the outbreak, has asked companies not to restart shuttered operations until at least Feb. 21. Production for a number of auto companies outside of Hubei had already been delayed past the Lunar New Year holiday until Feb. 10, and in some cases, production still remains offline. Nevertheless, even once the outbreak subsides, Chinese consumer demand for automobiles will take a substantial hit this year, with estimates showing that demand could fall by at least 5 percent because of the economic slowdown associated with the coronavirus outbreak....

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