[ET Net News Agency, 6 February 2020] Measures to prevent the spread of the new
coronavirus will disrupt the global auto supply chain and may dash hopes of a mild
recovery in China's auto industry, said S&P Global Ratings in a report titled: "The
Coronavirus Dashes Recovery Hopes For Global Autos."
"The coronavirus outbreak, which has triggered lockdowns in some Chinese cities and
several auto plant closures, will likely depress Chinese auto sales below our previous
base case for 1%-2% growth in 2020, although it is currently too early to quantify the
full impact," said S&P's credit analyst Vittoria Ferraris.
Production volumes in China had only just started to recover last November after a
two-year decline.
"We estimate the current two-week production shutdown imposed in the Chinese province of
Hubei will knock 2%-4% off total annual production in the region, which is home to about
9% of the total Chinese auto production," Ferraris said.
S&P believes China may further extend shutdowns beyond Hubei to limit contagion risk,
possibly affecting up to one-half of China's auto and auto-parts production.
Volkswagen is the automaker with the highest exposure to China. It manufactures vehicles
and components at 23 sites in China, representing nearly 40% of the group's consolidated
production.
Among suppliers, the credit rating agency thinks Bosch will be particularly hard hit.
With about EUR14 billion annual sales from China, China is Bosch's second-largest market,
after Germany.
"The coronavirus outbreak represents a material downside risk to our scenario for a mild
recovery of the Chinese auto market in 2020, with no relevant mitigant on the radar, said
Ferraris. "While the Chinese market maintains its long-term attraction for most global
auto manufacturers and suppliers, recent developments may contribute to turning 2020 into
an ever more challenging year for global automakers and suppliers than we originally
expected." (KL)