Global automakers have started withdrawing their employees from China and are contemplating suspending manufacturing as fears of the deadly Wuhan coronavirus continues to grip the world. Major companies, shops restaurant chains and tourists destinations had already started temporarily shutting down in China and now automakers too are following in their footsteps.
A large number of US, European, Japanese and Korean automakers have facilities in China. All automakers with notable presence and operations in China and Shanghai like General Motors, PSA Groupe, Toyota, Honda and others are likely to get affected if they have to suspend manufacturing, which looks quite likely to happen.
The Chinese government on Monday had extended the extended the Lunar New Year holiday by three days and many internet and tech companies too have asked their employees to work from home until at least February 10. A halt in manufacturing of cars can take a heavy toll on the global carmakers.
Crisis looms large on automakers
As of Tuesday, coronavirus has claimed 106 lives, with more than 4,500 confirmed cases in China. A number of major carmakers have a sizeable presence in China. Carmakers like General Motors, Honda and Nissan have sizeable operations in Wuhan. In fact, Nissan is in the process of building a factory in Wuhan in collaboration with Dongfeng. Wuhan, identified as the epicenter of the deadly coronavirus outbreak, which has prompted carmakers to restrict travel and forgo long-held traditions around the Lunar New Year.
Honda and PSA Groupe have already started withdrawing their employees working around Wuhan. Honda, which has around 30 associates and their families around Wuhan, has asked them to go back to Japan. Nissan, reportedly, is planning similar action. Toyota's spokesman Eric Booth said that the Japanese carmaker has already issued a travel restriction to China till further notice. Toyota, however, doesn't have a facility in China, so it won't have to withdraw employees.
Tesla on the other hand has its facility in Shanghai. Given that Shanghai is one of the most vulnerable places, travel restrictions and holiday extensions have been imposed there too. It now needs to be seen what step Elon Musk takes as a halt in manufacturing in Gigafactory 3 too cannot be ruled out if the virus continues to spread at a rapid pace.
Can coronavirus further slow down the economy?
China's economy has been slowing and coronavirus might affect it further. China is the world's largest market for cars, which has seen a number of US, European and Japanese open production facilities in the country over the past few years. However, automakers might now find it difficult operating in China given the outbreak of the virus.
Manufacturing activity was temporarily halted in China to mark the Lunar New Year. However, manufacturing was to resume this week, which now seems unlikely. It is likely that if the companies have already started withdrawing their employees from China, the might well keep their plants closed for longer period.