Just when the automobile industry thought it was out of the clutches of the Covid-induced supply chain SNAFU that had taken place over the last several years, it looks as though China’s strict Covid policy threatens to pull them back in again.
“At least three major automakers” are once again shuttering production, according to a new report from Bloomberg this week. Honda has shut down operations in Wuhan for the time being due to “limitations around movement” in the area, the report says.
The company also suspended operations at a lawnmower engine plant in Chongqing.
Yamaha has also been hit by the new Covid lockdowns, partially suspending operations at a motorcycle plant in Chongqing. Bloomberg reports that 8,721 new COVID-19 cases were reported in the area on Monday this week.
VW also halted production at a joint venture plant that it has with China FAW Group on Monday of this week, the report continues. Volkswagen is attributing the shutdown to a shortage of components. It has also shut down two of five production lines at its factory in Changchun and has no date for resuming operations.
Nissan, Mazda and Mitsubishi told Bloomberg that their operations had not been affected.
Recall, just last week we published on how China’s Covid restrictions were actually tightening when the country’s market had assumed they were easing.
“More than a week after Beijing fine-tuned its Covid Zero strategy, local governments are struggling to balance the need to control the pandemic while also limit the economic damage. Shijiazhuang, a closely-watched city that had experimented with a version of “living with the virus,” has reversed course, suspending schools and asking residents to stay at home for five days. As infections multiplied, subway rides in some big cities such as Beijing, Guangzhou and Chongqing have tumbled.
The result is that Goldman Sachs’s Effective Lockdown Index has increased in recent weeks, despite Beijing’s new order to reduce the need for mass testing and citywide shutdowns.”
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