AutoBeta(AutoBeta.net)02/07 Report--

Affected by the expansion of the pneumonia epidemic infected by novel coronavirus, Toyota Motor Co., Ltd. announced on the 7th that the resumption of work at its Chinese factory has been postponed to more than the 17th. Earlier, brilliance BMW also announced that its plant would suspend operations until February 17, as more and more carmakers face a long suspension of production because of stagnant supply of parts.

Toyota said it decided to extend the shutdown time at all Chinese plants, taking into account local and regional government guidelines on the outbreak, as well as judgments made by local logistics, parts procurement, and so on.

Earlier, Toyota released news that it had decided to suspend operations at its factories in China as of January 29. Toyota said that in the week after February 10, we will prepare for the resumption of normal operations after February 17.

At present, governments in many places have set the time for companies to resume work on February 10, so the inability of Toyota to produce at its factories in China will result in no cars for end dealers to sell, and the pick-up time for popular models such as the Halanda, Asia Dragon and RAV4 will also be further extended. Toyota's sales in China have continued to grow, and if the shutdown lasts for a long time, the negative impact on performance will be inevitable.

Toyota's Chinese factories produced about 1.4 million vehicles in 2019, up 6.6 per cent from the previous year. Including imported models and Lexus brands, Toyota sold 1.62 million vehicles in China for the whole year, up 9% from a year earlier, surpassing the Japanese market for the first time. Toyota China aims to sell 1.76 million vehicles in 2020, a year-on-year growth rate of about 8.6 per cent.

According to official sources, Toyota has now set up nine wholly-owned companies, 15 joint ventures and four representative offices in eight provinces and municipalities in China, as well as six vehicle factories and four engine factories in Tianjin, Chengdu, Changchun and Guangzhou.

With the expansion of the impact of the COVID-19 epidemic, parts shortage has become a common phenomenon in the automobile industry. Not only Toyota and BMW plants have been delayed, but more and more automakers will stop production due to supply chain problems. And this phenomenon even extends to the global automobile industry.

Fiat Chrysler has warned that one of its European plants could be temporarily shut down within two to four weeks if Chinese parts suppliers fail to resume production.

Bosch, the world's largest auto parts supplier, has also warned that novel coronavirus could affect its global supply chain because of its heavy reliance on the Chinese market. If this situation continues, Bosch's global supply chain will be disrupted.

According to Yonhap news agency, most of Hyundai's factories in South Korea suspended production on the 7th, and Kia also stopped work from the 10th because of the suspension of parts produced by Chinese suppliers, of which 87% of South Korea's imported car wiring harness is made in China. Therefore, when South Korean car companies restart production depends on the resumption time and supply plans of China's car wiring harness factories.

China's automobile industry has entered a half-month-long stagnation period, and all aspects of the impact will appear. Cui Dongshu, secretary general of the joint venture association, said that joint venture brands will be greatly affected by inventory losses, especially that some Japanese brands pursue an too low inventory coefficient, which is actually a great risk, although it brings an increase in dealer prices, but it is not good for vehicle sales as a whole.

Orders from Toyota customers will accumulate in February, which could lead to a rise in terminal sales, as Toyota's factory in China extended its shutdown again due to a lack of parts, after Toyota's sales in China continued to grow. Including Hanlanda, Asian Dragon, RAV4 and other best-selling models, there has also been a phenomenon of price increase before.

Overall, under the influence of the spread of the epidemic, it will be difficult for the automobile manufacturing industry with the characteristics of long industrial chain to return to work in the near future, and the automobile industry will stop production due to a serious shortage of spare parts, which may cause irreparable losses to the annual performance of automobile enterprises.

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