Will coronavirus affect NZ's car supply?
Friday, 14 February 2020
New vehicle suppliers to this country are bracing for stock shortages as result of the coronavirus outbreak in China, but probably not until the second part of this year.
The Motor Industry Association (MIA) says it's too early to say exactly what exact impact the health crisis might have on vehicle production for this market.
However David Crawford, chief executive for the MIA, says there's a growing sense of inevitability that some level of fallout will occur.
His personal feeling is that it'll happen in the second half of 2020 rather than sooner, as local distributors all hold reasonably strong product stockpiles.
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China is a not by any means the only supplier of components vital to the world's carmakers, but it is an especially important one.
'We understand that the Chinese have closed a lot of plants down, which also includes manufacturers of parts as well as of vehicles,' said Crawford.
'This will have an impact for sure on a range of manufacturers around the world and it will inevitably have a knock-on effect to the New Zealand market.
'We don't yet fully understand the full extent of the issue, but we are aware that, at some point, we will be expecting some kind of supply disruption.'
With manufacturing in China stymied, factories reliant on their production throughout Asia and in Europe are anticipating, or already experiencing, stock shortages.
Nissan, Hyundai and Kia are among major brands that have already indicated need to either restrict or totally halt production from some plants in their home countries. Fiat Chrysler Automobiles is facing a factory shutdown in Italy within a month if supply of parts does not start flowing again soon.
Having already closed an assembly line at Changshu in China due to the outbreak, Jaguar Land Rover has warned of potential disruption to its supply chains outside of China. It also concedes the coronavirus is likely to affect its fourth-quarter performance.
Domestic Chinese makes have closed down their manufacturing and Volvo, which is owned by Chinese giant Geely, is said to be at a standstill. Some of the domestic makers have reconfigured production lines to make masks that can help block particles and germs, disinfectant and goggles.
Renault's South Korean subsidiary, Renault Samsung Motors, has suspended assembly for the rest of this week due to supply chain disruptions.
MG Motor Australia and New Zealand has also reportedly placed restrictions on its Australasian-based staff travelling to or from China
Mr Crawford says the situation reminds how global car-making really is. He anticipates every manufacturer that sources parts out of China will be affected, so Kiwi motorists can expect to hear individual makers announce more about their situations in the near future.
'But because all of the makers do have a range of stock levels in NZ, the impact here won't be immediate. For some manufacturers it could well increasingly become a problem as the year goes on.
'The longer the plants remain closed in China, potentially the more severe the impact.'