Because the butterfly effect caused by the interruption of supply is also spreading on the global automotive industry chain.
The situation of the Xinguan epidemic in China is relatively mild. Hubei epidemic areas have not yet resumed work, and the resumption of work in other areas is also ongoing. Unexpectedly, the number of confirmed cases in South Korea, Italy, Iran, and Japan has exceeded 1,000. New cases abroad have surged, and the subsequent global risks have also brought uncertainty to the fragile automotive industry chain.
Apart from assisting component parts manufacturers to resume work, the auto industry chain has also started various self-help attempts.
Recently, GM announced that will continue to make reasonable plans for vehicle models, parts, and production processes. As early as 2019, GM has cut 3,500 parts in all model product lines, reducing the number of parts and components required by the factory by 12%.
Honda, In order to streamline processes and shorten manufacturing cycles, its R & D department has also cooperated with software company Autodesk to manufacture some automotive parts using 3D printing technology.
According to the “Research on the Development of China’s Auto Parts Industry”, there are more than 100,000 domestic parts companies in China. In the central and western regions where the epidemic is severe, the number of auto parts companies accounts for more than 20%. PwC’s previous report pointed out that about 40% of the world’s top ten suppliers’ production plants and R & D centers are in hardest hit areas.
In addition, China is the most complete country in the global automotive industry chain. The butterfly effect caused by supply cuts is also spreading across the global automotive industry chain.
In South Korea, most of the domestic automotive industry’s wiring harnesses are imported from China. Hyundai Motor, Kia Motors, and Renault RSM have all ceased production due to a shortage of domestic parts in China. FCA also suspended operations due to supply cuts at its supplier factories in Italy and Serbia. The Renault-Nissan-Mitsubishi Alliance has also previously announced the suspension of production at some plants in countries including Malaysia, the United States and Japan.
And India, Automotive accounts for nearly 50% of its manufacturing GDP. There are also big car companies like Tata, but sensors, electronic components, and injectors are zero. Parts are highly dependent on Chinese domestic suppliers. Recently, India has decided to use smaller and more expensive air freight to transport auto parts.
Discontinued supply and production, as well as the cancellation of various offline auto shows, have caused the launch of many new models and delayed delivery of new models.
The previous announcement announced that the original delivery time was from February to March. The customer delayed the delivery; the second mass production model of the Zero Running Car T03, NezhaU, SAIC-GM Chevrolet’s first electric car Changru and Xiaopeng’s second car, the P7, have also been postponed.
Stagnation in sales and production suspension brought huge losses, and the automotive industry chain set off a new round of layoffs and salary cuts. Recently, Renault announced that the company may lay off employees on a large scale. Jaguar Land Rover has already taken action, cutting 500 people at its Harwood plant in late January. In China, SAIC, which has the largest sales volume and the highest market value, has launched a number of subsidiaries to reduce wages.
The longer-term hidden danger lies in capacity transfer, although this is a last resort. Previously, Weifu Technology, which supplies brake pedals for Honda CR-V, announced that it will transfer its production capacity in Wuhan to the Philippines factory, and said that if the epidemic spreads, it may transfer more capacity. Due to the resumption of work and transportation, the production of the domestic automobile industry chain is delayed. In order to avoid risks, the domestic and foreign automobile industry chains will adjust their production layout in the future.
In any case, parts and components are the lifeblood of the automotive industry. In the face of the risk of exacerbated supply cuts, auto companies can do more to help themselves.