Coronavirus: Carmakers scramble to secure supply

UPDATED: 3/3/2020

CORONAVIRUS-RELATED manufacturing bottlenecks and transport disruption are likely to impact Australian new-vehicle deliveries in coming months as the situation intensifies in hotspots including South Korea and Italy.

Hyundai and Renault-Samsung idled their South Korean factories earlier last month as stocks of certain components sourced from China ran low, and Fiat Chrysler Automobiles (FCA) suspended production at its plant in Serbia for the same reason.

Kia kept its production lines in South Korea running at a reduced rate and Nissan has temporarily reduced output at two of its facilities in Japan. FCA has also restricted access to all its sites in Italy due to a coronavirus outbreak in the country’s northern regions.

Jaguar Land Rover has also taken the unusual measure of shipping critical China-sourced components such as key fobs in suitcases, in order to keep its British production lines running.

Many component suppliers are located in China’s Hubei province, said to be China’s fourth largest automotive manufacturing hub and subject to strict lockdowns since its capital Wuhan was identified as origin point of the coronavirus.

A Hyundai Motor Company Australia (HMCA) dealer bulletin circulated during last month and obtained by GoAuto advises dealers to take action in order to mitigate potential stock shortages and keep customers advised about expected delivery dates.

HMCA senior manager for PR, sponsorship and events Guido Schenken told GoAuto the company was “monitoring the situation and working closely with our regional offices and dealer network to ensure customer deliveries are affected as little as possible”.

“We have enough stock in Australia to meet current demand, but if the situation continues it will eventually affect Australian deliveries,” he added.

The HMCA bulletin said: “Whilst stock is limited, there is enough stock overall.” It also advises dealers that a car shipment aboard the vessel SFL Conductor has been quarantined in Melbourne by the department of agriculture.”

A reason for the vessel delay is not cited, but last year the company was among several that experienced long delays when ships were turned away or quarantined on biosecurity grounds due to infestations such as brown marmorated stink bugs and exotic Heath snails.

Kia Motors Australia general manager of media and corporate communications Kevin Hepworth told GoAuto a ship carrying 5000 Kia vehicles had unloaded in Melbourne last week and was on its way to Sydney, consistent with movements of SFL Conductor as reported by MarineTraffic.com.

Mr Hepworth said Kia was experiencing “some tightening of supply but certainly not to a level of drastic panic” due to coronavirus-related bottlenecks.

“There are supplies on ships so we expect to be able to meet business plans in the immediate future,” he said.

“I understand there is now some movement in components from China and the official Kia position is that manufacturing is being carefully managed to minimise disruption to global markets.”

Mr Hepworth added that Kia Australia was still on track to launch the fourth-generation Sorento large SUV in mid-June and that hopes were high production would “pick up in time for that”.

Renault Australia did not disclose whether idling of the Renault-Samsung plant that produces the Koleos mid-size SUV would impact local supplies, instead issuing a statement that the French company had “set up a system to anticipate, monitor and control supply risks for its plants around the world”.

Nissan Australia director of corporate communications Karla Leach said: “It is more than likely that there will be some impact, as this situation is still evolving. We cannot yet quantify what that impact will be.”

Nissan Australia also provided an official update on slowdowns at its Kyushu and Shonan plants in Japan, where parts of the production lines were shut down or weekend shifts cancelled last month.

“We plan to make up for the impact on February production by increasing production in March and onwards,” the company said in a statement.

According to Bloomberg, Nissan sources “more than 800 parts” from Hubei province, destined for its factories Britain, India, Japan, Malaysia, Mexico, Russia, Spain and the United States.

A spokesperson for Chinese brand LDV, which is imported and distributed in Australia by the independent Ateco Group, said: “Yes we’ve had some supply issues like everyone but we maintain strong buffer stocks in Australia so it’s very much business as usual. The factory is back at work and progressively ramping up, so we believe we’ll largely be unimpacted.

“Doing business has been somewhat impacted due to the extension of the spring festive holiday, which the Chinese government implemented to try and contain the situation. But the impact has been negligible as we’re used to doing business via video conferencing, phone and email anyway.”

Fellow Chinese auto group Haval/Great Wall Motors said the local operation was not yet impacted. Product planning, digital marketing and PR manager Edward Mason-Jefferies said: “At this stage the coronavirus is not impacting the Haval/GWM business here in Australia and we continue monitor the situation in China.”

Similarly, Suzuki Australia general manager for automobiles Michael Pachota told GoAuto the company had not yet “had any disruption with supply chain as a result of any coronavirus related issue”.

Speaking with GoAuto at the recent CX-30 launch in Victoria, Mazda Australia managing director Vinesh Bhindi said coronavirus impacts were “yet to be determined or shared with us”.

“We haven’t been notified of anything, but I suspect people at Mazda Corporation are evaluating how that affects our supply line,” he said.

“There is a lot of supplier base in China so I suspect if they are affected, we will all be in the same boat. But nothing to share with you right now as we don’t know.”

Mazda Australia did not respond to a request for updated information and neither did FCA Australia.

As previously reported by GoAuto, MG Motor Australia claims to have secured plenty of stock from its Chinese factories to support this year’s ambitious sales plans.