Parts suppliers expect the Chinese auto market to face challenges
The CEO of yorozu, Nissan's parts supplier, said that a month after China's resumption of work, the coronavirus crisis still puts pressure on car demand, and the auto industry is coping with a slow and painful recovery.
Several weeks after China's auto factories closed in early February, they are now closed in Europe, the United States and other parts of Asia.
While supply chain disruption and parts shortages are a problem, the bigger challenge is a lack of consumer demand, although the epidemic has increased the appeal of people using private cars rather than public transport.
"Initially we were unable to produce because of supply chain problems, but we solved this problem through a back-up plan," said Akihiko Shido, chief executive of yorozu Yorozu supplies suspension systems to the world's largest automakers, including Toyota, Honda, Daimler, general motors and Volkswagen.
"Now consumers are in a low mood, which actually leads to a decline in production in places like Japan," Shido said in a telephone interview
Production at yorozu's plants in Thailand and Indonesia has also been cut, and all of the company's plants in the United States, Mexico, Brazil and India have been closed.
By contrast, in Wuhan, where the epidemic broke out, yorozu's two auto parts factories now have 80% of their capacity and more than 90% of its 580 workers are back on the production line. But Shido said the production was mainly to make up for the decline in inventories and did not stimulate "real demand.".
Most of China's auto dealers have also resumed operations, with Wuhan ending its 76 day siege on April 8. Analysts at Goldman Sachs expect that with the support of new car subsidies from local governments, the customer flow of dealers may have returned to the level of 2019, and the drop in weekly sales in March has been reduced.
However, Tang Jin, a senior research analyst at Mizuho bank and an expert in China's auto industry, predicts that China's new car sales will decline by 10% in 2020 compared with the previous year. The shadow of the coronavirus has not yet disappeared from the hearts of consumers.