Sat. Feb 29th, 2020

Europe has resources to face the closure of Chinese automotive plants



European vehicle manufacturers have enough diversification and resources to deal with the consequences of the coronavirus epidemic that paralyzes car factories and automotive components in China, a country where one in three vehicles sold in the world are assembled.

This is understood by the manufacturers and experts consulted by Efe, who nevertheless point out that the automotive industry of Japan and South Korea are, because of their proximity to China, the most exposed to the stoppage of production in plants in the Asian giant, as well as the logistical difficulties it is causing and that hinder the exit of pieces from the country.

ONE OF EACH THREE CARS ARE CHINESE

China is the world’s leading vehicle manufacturer. In 2018, it copied 29% of the total production of cars and commercial vehicles, according to data from the global employers’ association of car manufacturers, OICA (for its acronym in English).

However, the director of the Master’s Degree in Automotive Engineering at the European University, Carlos Talayero, argues that the stoppage of its automobile factories – which can be reopened as of Friday – will not necessarily affect global vehicle sales, since almost All production is for internal consumption and, therefore, is not exported.

In addition, he explains to Efe that in Europe – except Germany and to a lesser extent Holland – there is a high local production and most manufacturers have a plan B to replace suppliers if necessary.

“Punctually, the lack of some component can affect, but thanks to the relocation of production, manufacturers have room,” he added.

SPAIN EXHIBITION

For his part, the professor of Finance at the IEB, Javier Santacruz, explained that in the case of Spain, the manufacturers of components Antolin and Gestamp, which have plants in China, may suffer delays when serving orders.

In any case, the impact would be less than in countries such as Germany and, to a lesser extent, Holland, due to the high exposure of these countries to imports from the Asian country.

However, he points out that the car industry of countries close to China, such as Japan, South Korea and even India, could be affected, not so much by the paralysis of some Chinese plants, but also by the difficulties in taking production out of the country.

SITUATION OF MANUFACTURERS

In fact, on February 4 Hyundai Motor and its subsidiary Kia Motors already announced that they were suspending production at all of their plants in South Korea due to the shortage of components from China due to the coronavirus outbreak.

Nissan also plans to suspend production on Friday and Monday at its plant in Kyushu (Japan) for the same reason, and Renault suspended Tuesday and until Monday next production in Busan (South Korea).

The French also keeps its plant in Wuhan (China), the epicenter of the coronavirus outbreak, which will continue without producing until tomorrow, at all times complying with what was dictated by the Chinese authorities.

Also the German Volkswagen has postponed the reopening of some of its factories in China, although it is confident that the two joint venture companies that it has in the country with FAW (First Automotive Works) and SAIC (Shanghai Automotive) will restart production, as very late, early next week in all its factories.

The Japanese Toyota will value Monday if it retakes the production of its Chinese plants based on the guidelines of the authorities and the situation of the supply of parts.

PSA, owner of brands such as Peogeot or Citröen, has created a working group to analyze the situation and, although it recognizes that there are tensions at the logistic level, at the moment they do not see significant “short-term” risks for their assembly plants in all the world.

Sources of the Spanish Gestamp, manufacturer of components, have explained that its 11 Chinese plants have been closed since the Chinese new year (January 25), although from Monday it is expected to gradually return to normal.

“The company has activated the appropriate prevention protocols and measures and works in direct coordination with the Chinese authorities. Additionally, as a preventive measure, it has canceled all planned group trips to China,” they added.

The European Fiat Chrysler Automobiles (FCA) also assures Efe that at the moment it has not detected an “immediate impact” in its global supply chain, although it continues to “monitor” the situation in case a worsening is perceived in the coming weeks.

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