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CNA: China Auto Industry Faces Parts and Order Shortages

Affected by COVID 19, the Chinese auto industry is facing parts and order shortages. Despite the fact that the Chinese government recently introduced a stimulus plan for electric vehicles and used cars, it is believed that the fate of the Chinese auto industry is dependent on the recovery of the supply chain outside of China. The Central News Agency reported that, due to uncertain future orders, once they are caught up making the existing safety stock orders, many auto manufacturing plants may have to shut down. To reduce their costs, some factories have started to give workers three days off a week from their work shift. Meanwhile the auto market demand is weak as well. Auto sales revenue in the last week of March was down 24 percent compared to the same period in 2019. Airtex in Tianjing is predicting a 30 percent order reduction once the U.S. can get out of its COVID 19 lockdown. As most countries in Europe and the US are dealing with COVID 19, auto makers in China, especially electric auto manufacturers who rely on imports of key components and parts, will face a parts shortage. It is expected that the risk to the auto industry will come in the second half the year.

Source: Central News Agency, April 11, 2020