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Toyota Extends Plant Shutdowns in China

Carmakers are beginning to extend shutdowns across the country.
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Toyota says all 14 of its factories in China will remain closed for another week because parts shortages due to the country’s coronavirus epidemic.

Toyota had hoped to reopen the factories— four vehicle assembly plants and 10 components facilities—on Feb. 10. Reuters reports that the company’s decision to delay was influenced by the government’s extension of the Lunar New Year holiday, a move meant to discourage people from congregating in workplaces.

Honda also has idled its plants in China. The carmaker initially intended to reopen them on Feb. 10. Now it will extend the shutdown until at least late February, according to the Tokyo-based Nikkei business daily.

Deadlines Loom

IHS Automotive estimates that by Feb. 10, the closures will be enough to cut China’s scheduled domestic vehicle output by 7% in the first quarter. If the stoppage continue to the end of the month, the firm warns, suppliers will run out of stockpiled parts, and vehicle production could plummet by one-third.

The only auto plants outside China to be affected to date by the coronavirus outbreak are in South Korea. Today Hyundai is suspending operations at all seven of its facilities there until at least Feb. 12.

Other overseas factories will follow unless suppliers in China are able to get back to business within the next week or two. Fiat Chrysler Automobiles said yesterday that parts supply problems in China could idle one of its factories in Europe in as little as two weeks from now.

The Bottom Line

Disruptions to foreign auto plants aren’t likely to be a big deal if workers in China’s parts facilities are able to return to work by Feb. 21. If not, things could get messy.

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