Automotive & truck supply chain under China Wuhan virus epidemic.

Keywords: Wuhan China, virus, howo truck parts, parts production

Affected by the new crown pneumonia epidemic, the automotive industry's start in 2020 did not present the same glorious scene as in previous years.
In order to better cooperate with the prevention and control of pneumonia epidemic of new coronavirus infection and stop the spread of the epidemic, Dongfeng Motor, Great Wall, Renault, Toyota, Ford, Qoros, SAIC-GM, Volvo, Chery, Geely and many other car companies have announced delays in resuming work after new year holidays.
Lagging of production, combined with multiple factors such as personnel flow restrictions and isolation, and poor logistics across the country, domestic automobile production will be blocked on a large scale. The automobile production industry chain in some regions such as Hubei has been temporarily suspended. The overall trend of the auto market this year will also be greatly affected.
1- virus wuhan china empty city
(Wuhan streets are almost empty, this is a city with 14 million population)

Previously, according to the prediction of relevant agencies, the probability of a decline in China's automobile sales in 2020 will narrow, with a 1% to 2% decline. However, the latest survey by Gasgoo shows that nearly 30% of participants believe that the Chinese automobile market will decline by 5% to 10% this year, and 25% of participants believe that this year's automobile market will fall between 0 ~ 5%,  24% of participants believe that this year's auto market sales will fall by more than 10%.
The overall bearish sentiment is very strong. Taking all factors into consideration, if the pneumonia epidemic affects the auto market for 1-4 months, it is expected that the decline in passenger car sales for the full year of 2020 will be 3-6%.
So, how specific is the automotive supply chain sector affected by the epidemic?
According to the latest news, German auto parts supplier Webasto said that the company has seven employees infected with the new coronavirus. To this end, Webasto headquarters will remain closed until 3rd February. It is reported that Webasto has production bases in many countries around the world, including 11 offices in China, including Wuhan-the place where the new coronavirus broke out. The company has now banned employees from travelling to and from China and temporarily closed its factory in Stockdorf, Germany.
The epidemic has become a common problem faced by supply chain companies, and Webasto is not the only company affected in this area. Bosch CEO Volkmar Denner warned recently that the new coronavirus could affect its global supply chain because Bosch's supply chain relies heavily on China. "We need to wait for things to happen. If this continues, Bosch's global supply chain will be disrupted." Volkmar Denner said.
2- virus china beijing, crowds back to work place
(Large number of people going back to workplace after holiday, which may causes another peak of virus infection)
Volkmar Denner's worry is reasonable. At present, China has become Bosch's second largest market in the world. Bosch has nearly 60 companies in China and is located in Shanghai, Nanjing, Changsha, Suzhou, Wuhan, Chongqing and other cities. In Wuhan, Bosch has two factories producing steering systems and thermal technology. In addition to supplying domestic car companies, parts produced in these factories will also provide technical support to foreign customers.
For example, Bosch's iBooster production base in Nanjing has a production network covering the entire Asia, including China, Japan, and Southeast Asia. It supports not only China, but also assist the electrification and intelligentization of automotive products throughout the Asia-Pacific region. However, due to the impact of the epidemic, many of these companies are currently unable to start normal operations. If this situation continues for a while, it will inevitably affect Bosch's global supply chain.
Parts companies such as Bosch and Webasto are deeply rooted in the Chinese market. In recent years, as the Chinese market has become increasingly prominent in leading the automotive industry in electrification, intelligence, networking and sharing, more and more component companies have begun to continuously improve their domestic engineering R&D and manufacturing ability.
virus wuhan china, aid arriving
(Aid arriving Wuhan, the city was sealed a few days ago due to the virus)
For example, since ZF entered China in 1981, it currently has nearly 40 manufacturing plants in more than 20 major cities, including Shanghai, Beijing, Tianjin, Chongqing, Hangzhou, Suzhou, Nanjing, and Wuhan. In November 2019, ZF signed an agreement with the Huadu District Government of Guangzhou to establish its third R&D center in China to expand the Chinese market in a more comprehensive and in-depth manner, while leveraging its core in China's development Technology to advance the world towards the next generation of mobility.
As the largest auto parts supplier in Japan, Denso currently has 28 companies in China, mainly located in Tianjin, Shanghai, Guangzhou, Wuhan, and Changchun. In Wuhan, Denso and local company Wuhan Guangting Information Technology Co., Ltd. established Denso Guangting Automotive Electronics Co., Ltd. to design and develop software for automotive instrumentation.
Another Japanese parts giant, Aisin Group, has also deployed nearly 40 companies in China. Its joint venture with GAC Trumpchi, GAC Aisin Automatic Transmission Co., Ltd., started construction in June last year and is scheduled to be completed by the end of this year Achieve mass production. Based on the extensive layout of these enterprises in China, and their links in demand, supply, production planning, and logistics are often interlocked. If the impact of this epidemic will continue for some time, it will inevitably be reflected in some companies. Just start the whole body. "
CuiDongshu, secretary general of the China Federation of Vehicle Industry Associations, believes that the core feature of automobile production is the long industrial chain and the connection of the supply chain is extremely important. Under the current circumstances, Hubei’s auto parts system should not resume production on time, at least one week or longer, this will have a serious adverse impact on automobile production in February, especially in Hubei.
3- virus wuhan china, villages block, roads blocked
(Country roads blocked by villagers)

As we all know, there are many auto companies and auto parts auto companies in Hubei. In addition to Dongfeng Passenger Cars, Dongfeng Honda, Dongfeng Nissan, Dongfeng Renault, Dongfeng Fengshen, Shenlong Automobile, SAIC-GM, Geely, Weimar and other vehicle companies, they also gather A large number of parts and components companies such as Delphi, Valeo, Faurecia, Honeywell, Visteon, Ambofo, Tenneco, Standa and so on.
According to relevant statistical data, as of the end of 2018, Hubei Province had 1,482 companies above the designated size in the automobile manufacturing industry, with the main business income of the automobile industry being 666.3 billion yuan and automobile production of 2.419 million units, which is a veritable automobile province. Among them, Jingzhou City alone has more than 200 auto parts production and supporting enterprises, which is the most complete auto parts concentration area in Hubei except Wuhan. Affected by the epidemic, the normal production of these enterprises is basically affected more or less, which in turn affects the overall automobile market trend.
4- virus wuhan china seafood market, area of begining
(Wuhan seafood market, this may be the begining of virus) 

It has not happened before that the production process of parts and components enterprises has affected the production progress of the vehicle. According to the current situation, it is still unknown that when the parts and components enterprises in Hubei area will resume normal production order.
In the opinion of analysts at the Institute of Automotive Research, it is generally believed that the epidemic will last for 2-3 months, which will undoubtedly affect the work and start-up processes of relevant enterprise personnel, and then affect the domestic economic development in the short term. Specific to the automotive industry, due to traffic control and crowd movement management in key areas, users are unable to go out, and car viewing and car picking up are affected, which has led to the suppression of some consumers’s car purchase needs, coupled with delays in the start of dealerships, and reduced terminal promotion activities. , The release of terminal car purchase demand will also be delayed. Among them, in the automotive supply chain sector, given that production and logistics in some regions, such as parts and components companies in the central provinces, are blocked and cannot operate normally, there will be a risk of supply disruption in the supply of some auto parts products.
In addition, the analyst believes that in the critical period of epidemic prevention and control, car companies and component companies should also pay close attention to the situation of employees and their families to enhance corporate cohesion and ensure the smooth development of subsequent product research and development, production and other tasks to ensure normality. Productivity can be quickly restored after work. Actively promote the digital transformation of enterprises, and transfer some of their offline business to online, such as marketing, car sales and delivery, maintenance, parts optimization, etc., to reasonably avoid the business risks brought about by the inability of enterprises to operate normally during the epidemic. 

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