Coronavirus: automotive supply-chain concerns ‘will spread rapidly’

Following the news that Fiat-Chrysler (FCA) is warning that it could halt production at a European plant in a matter of weeks as a knock-on effect of the coronavirus, market analysts are predicting that such concerns and their impact “will spread rapidly”.

Here’s what a Fiat’s spokesperson told Tyrepress: “Fiat Chrysler Automobiles (FCA) continues to monitor its global supply chain in relation to the coronavirus outbreak in China. There is no immediate impact on the Group. If the situation in China continues to worsen, FCA has identified potential risk within the next two to four weeks at one manufacturing facility in Europe. The Group will continue to monitor the situation and continues to develop contingency plans to support its global manufacturing.”

David Leggett, Automotive Editor at GlobalData commented: “We have been waiting for this and it is an inevitable consequence of the deepening and spreading economic impact of the coronavirus, especially on manufacturing supply-chains. Many factories in the Wuhan and Hubei province have been on lockdown since the start of the Chinese New Year holidays.

“The emerging problems for FCA outside of China are likely to be mirrored by other vehicle manufacturers and reflect both the long-run internationalisation of parts supply-chains and the predominance of ‘just-in-time’ lean manufacturing processes that keep inventory low.

“The next few weeks will be critical for automakers. The typical car is made up of 20,000 parts, and there is an elongated supply-chain of parts and sub-assemblies put together in complex sequence to create the finished vehicle.

“Korean manufacturers were the first to show up as impacted by China supply-chain disruption reflecting shorter shipment distances between China and Korea, but the FCA news indicates that impacts across the world are now coming over the horizon on shipment transit schedules.”