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‘Critical’ weeks ahead for car factories as coronavirus hits supply chains

With factories in China shut down to contain deadly coronavirus, parts shipments to European production lines are drying up.

(FCA)

European car production could face delays as coronavirus shutdowns in China impact parts supply to major factories.

Fiat Chrysler Automobiles (FCA) has announced that it has “identified potential risk within the next two to four weeks at one manufacturing facility in Europe”, but there are concerns that this could affect other manufacturers across the continent and in the UK, too.

David Leggett, automotive editor at analytics firm GlobalData, has warned that the next few weeks are “critical” for car manufacturers because “the typical car is made up of 20,000 parts, and there is an elongated supply chain of parts and sub-assemblies put together in complex sequence to create the finished vehicle”.

We have been waiting for this and it is an inevitable consequence of the deepening and spreading economic impact of the coronavirusDavid Leggett, GlobalData

He added: “We have been waiting for this and it is an inevitable consequence of the deepening and spreading economic impact of the coronavirus, especially on manufacturing supply chains. Many factories in the Wuhan and Hubei province have been on lockdown since the start of the Chinese New Year holidays.

“The emerging problems for FCA outside of China are likely to be mirrored by other vehicle manufacturers and reflect both the long-run internationalisation of parts supply chains and the predominance of ‘just-in-time’ lean manufacturing processes that keep inventory low.”

Mike Hawes, chief executive of UK car industry body the Society of Motor Manufacturers and Traders, said: “Global automotive supply chains are complex and deeply integrated, so any event that causes disruption and, potentially, plant shutdowns as a result, is very concerning.

“We are closely monitoring the situation in China and manufacturers will be working to adapt their processes to help mitigate any potential supply issues. The immediate priority, however, must be the health and wellbeing of workers and the general public.”

PA