The coronavirus outbreak in China has temporarily shut down many factories in the country – many of which make crucial parts for various products including for cars and other vehicles. The closure which started with the closure because of the Lunar New Year holidays in China was extended by Chinese authorities to prevent the spread of the virus. While some manufacturing units were allowed to open and restart operations in Monday, many still remained closed.
This disruption in the supply chain has put many companies in a tight spot with regards to inventory, including auto manufacturers. ,
Japan’s Nissan became the latest car manufacturer to announce the temporary closure of one of its factories in Japan because of a shortage of supply of parts from its Chinese supply chain because of closure of production units there.
Production at a plant in Japan was halted for two days, the company announced, where the company manufactures its Serena and X-Trail models of cars.
Similar issues of disruption in their supply chains is being faced by other major global car brands because of the closure of the majority of manufacturing sector in China as the government there tries to control the rapid spread of the coronavirus.
Last week, a shortage of supply of parts from suppliers in China forced the South Korean auto giant Hyundai to Hyundai temporarily close its factories in its home country.
This is also the case with a number of the other major car makers of the world as they grapple with the shortage of supplies of crucial parts from China because of the temporarily closure of factories there.
China is also popularly known as the ‘factory of the world\’ and is one of the most important players in the global supply chain for the automotive industry. Production units in the country are engaged in the manufacturing of key parts for cars which are exported to the assembly units of global brands across the world. Global supply chains of the auto industry has been hit particularly hard because Hubei, which is a major hub for car manufacturing, is the region of China which is the epicenter of the virus outbreak and as such strict restrictions have been imposed in the province by the Chinese government to check the spread of the virus. The coronavirus has killed more than 900 people so far – mostly from mainland China while the virus has spread to many other countries.
Even car makers Europe have been affected with Fiat Chrysler announcing last week that it was contemplating temporarily stopping production at one of its production units in Europe because of the shortage of supply of parts from China. Fiat Chrysler is one of the many companies that crucially depend on China for supply of parts.
”It only takes one missing part to stop a line,” said Mike Dunne, a consultant to the car industry in Asia.
Nissan said that production could restart in the factories of its suppliers in China on 17 February.
“Due to supply shortages of parts from China, Nissan Kyushu in Japan will carry out temporary production adjustments on February 14 and 17,” Nissan said in a statement.
(Adapted from BBC.com)