Industry braces for impact of coronavirus outbreak

Association head says tallies in first two months could be down 20 percent year-on-year

China's auto production and sales may suffer if the coronavirus outbreak continues to spread across the country, said experts and company executives, but the scale of impact is too early to determine.

Few people are visiting dealerships in recent days and production has been stalled as Chinese authorities have extended the Spring Festival holiday to curb the coronavirus that has infected more than 14,000 people and killed over 300 across the country.

China's most popular international carmaker Volkswagen AG said on Sunday that its joint ventures with Jilin province-based FAW Group and Shanghai-headquartered SAIC Motor will follow the schedule of local governments and they will not restart production before Feb 10.

BMW, Toyota and Ford said their plants will be closed until Feb 10 as well. Carmakers in Wuhan, capital of Hubei province and epicenter of the coronavirus, including Dongfeng's joint ventures with Renault, Honda and PSA, said no decision has been made on when production might resume.

Hubei, especially Wuhan, is a manufacturing and transport hub. Last year, the province produced 2.24 million vehicles, accounting for nearly 9.9 percent of total production in the country, according to the China Passenger Car Association.

Cui Dongshu, secretary-general of the association, said vehicle production in February will take a huge hit, and sales in China during the first two months of 2020 will fall by at least 20 percent year-on-year.

But Cui said there will not be much negative effect in the long run. He noted the 2002-2003 SARS epidemic had little long-term impact on China's passenger car market, which saw sales surge 70 percent year-on-year in 2003.

Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said the market is much more developed than 17 years ago and less likely to rebound. But it should return to normal when the coronavirus is contained.

The association estimated in December that China's auto market would fall by 2 percent year-on-year in 2020. It had fallen for two years in a row in 2018 and 2019.

Joseph Massaro, CFO for auto technology supplier Aptiv, expected China's auto production in the first quarter to slide about 15 percent while full year production would fall 3 percent.