News & Case
News & case
Many car companies have stopped production at their factories in China Oct 24, 2023

Many car companies have stopped production at their factories in China


According to several foreign media reports, a Volkswagen spokesman said on Monday that two production lines at FAW-Volkswagen's Chengdu plant and Changchun plant have been suspended due to a shortage of parts, with no expected recovery time and no closed-loop production planning. In response to the above reports, FAW Volkswagen has not yet replied.




Volkswagen, Toyota and Honda are halting or reducing production at factories in China

Nikkei Chinese website reported on November 30 that due to China's strict epidemic lockdown measures, Toyota and Honda and other Japanese car companies were forced to reduce production or stop production. From November 28 to 29, Dongfeng Honda suspended production at three vehicle plants in Wuhan. Toyota spokesman Shino Yamada also said the company was adjusting some production at its factories in China due to a variety of factors, but declined to elaborate.




It can be said that whether it is the quarantine of people at home caused by the epidemic control, or the shortage of core parts and chip shortage caused by various comprehensive factors, it is the "mountain" that is pressing on the current production field of Chinese car companies.


On November 27, Ideal also issued a statement in the official APP, saying that due to the delay in the supply of core parts, some models that should have been delivered at the end of November will be delayed to December. However, Ideal also further said that the original December delivery of the model will not be affected.


But at the same time, it should also be noted that according to the survey of the Passenger Association, from November 1 to 27, the production capacity of domestic car companies was flat last year. "Although some brands in overseas markets have exposed factors such as parts shortage and energy supply interference affecting the overall annual global production forecast, the current production of the Chinese market remains basically stable, and fuel vehicle inventory is absolutely abundant."



Of course, due to the recent rebound of the domestic epidemic, the association also said that the proportion of car dealers closed has increased, which has a greater impact on the flow of exhibition halls and orders in the market. Data show that in the fourth week of November (November 21-27), the overall narrow passenger car market retail sales reached an average of 53,000 vehicles per day, down 31% year-on-year and 32% lower than the average in the fourth week of October this year.


Wuhan Guangzhou area auto factories have closed loop production

In fact, due to the frequent occurrence of the domestic epidemic, a number of car companies have launched a closed on-site production strategy.


According to sources, Dongfeng's car factory in Wuhan has once again launched the "first-line production" defense war.


At present, Shenlong Automobile Wuhan factory strictly implements closed-loop management, and 1100 employees are currently stationed in the factory for closed production. Since November 23, the Dongfeng passenger car factory has also closed 2,300 people.

In Guangzhou area, since November 24, GAC Passenger Cars and GAC Research Institute have carried out closed-loop work and production drills. As of November 20, GAC Group invested about 3,800 people in Panyu investment enterprises and about 700 people in Conghua Mingzhu Industrial Park investment enterprises in the factory office and production.


The joint venture car company Dongfeng Nissan since October 17 also launched the overnight production strategy, the current average daily production of about 1,500 vehicles in Guangzhou Huadu factory, which is reduced from the normal production.



According to foreign media reports, due to the epidemic and containment strategy in China, parts supplier Bosch's four factories in China have also adopted a closed-loop production strategy, of which Chongqing, Chengdu and Jinan are auto parts factories. According to Bosch, closed-loop production has a controllable impact and can currently meet customer orders.


It is worth mentioning that according to Goldman Sachs 'macro outlook for China in 2023, China's GDP growth will accelerate from 3.0% this year to 4.5% next year, because China may exit the dynamic zero new coronavirus case policy.


The report pointed out that the withdrawal of the policy of dynamic elimination of COVID-19 cases may start soon after the "two sessions" in March, thus boosting China's economic growth. Specifically, economic growth in the first half of the year may be significantly lower than market expectations, but in the second half of the year it will be significantly higher than market expectations. "We believe the initial phase of China's reopening is likely to be negative for growth, with a surge in COVID-19 cases and a temporary decline in population mobility, similar to the reopening experience of several other East Asian economies."




According to the data of the Association, the current inventory of domestic car companies is generally high, coupled with the pulling role of some stimulus policies, or will stimulate automobile consumption. However, the epidemic and policy uncertainty, as well as the accompanying core parts and core problems, bring certain risks to the end of the year. The association mentioned that "the advance consumption before the Spring Festival next year is expected to be reflected in the recent period, as long as the prevention and control of various places are not excessive, there is still confidence in the car market at the end of the year."


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