Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Nissan, Honda delay restart of some China plants due to coronavirus

Published 21/02/2020, 09:29
Updated 21/02/2020, 09:29
© Reuters. 89th Geneva International Motor Show in Geneva

By Naomi Tajitsu

TOKYO (Reuters) - Japanese automakers delayed on Friday the restart of plants in China near the epicentre of a coronavirus outbreak, complying with authorities' directives, but raising the risk of further supply disruptions that could hit global car production.

Nissan Motor Co (T:7201) said it would keep its plants in Xianyang in the central province of Hubei, and Zhengzhou in the neighbouring province of Henan, shuttered after Monday, when it had planned to resume operations, but did not set a new date.

Honda Motor Co (T:7267) said operations at its plants in Wuhan, Hubei's provincial capital in which the outbreak began, would remain suspended until March 11.

Toyota Motor Corp (T:7203) said it would resume production on Monday at its plant in Chengdu in the southwestern province of Sichuan, returning all four of its China assembly plants to operation from next week, but output would be limited at some. [L4N2AL29L]

In an email, Nissan said its delay was due to a directive by government authorities in Hubei asking firms to keep operations shut through March 10. Output issues at suppliers were also affecting vehicle production, it said.

The virus, which has killed more than 2,200 in mainland China, has wreaked havoc on the global automotive supply chain, stalling production at plants there and leaving automakers scrambling to source the roughly 30,000 parts each car needs.

"Wuhan is a city which produces virtually every type of component used in vehicles," said Takeshi Miyao, managing director of consultancy Carnorama.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"So not only are vehicle assembly plants in the city unable to source parts, vehicle plants all over the world which source parts from Wuhan are being affected."

He added that, where possible, automakers were securing parts from suppliers' plants elsewhere.

Some automakers were taking more direct approaches to procurement. This week, Jaguar Land Rover (JLR) said it had flown Chinese parts in suitcases to Britain to maintain production, and could run out of components in two weeks.

China's manufacturing sector is struggling to restart after an extended Lunar New Year break, hindered by travel and quarantine curbs across the country.

The suspension of output at Nissan's two plants, which make the X-Trail SUV crossover and the Altima sedan in a joint venture with China's Dongfeng Motor (HK:0489), comes as the automaker struggles to recover profitability after the arrest of its former chairman, Carlos Ghosn, in 2018.

Nissan has also cut output at some Japan plants over issues with procuring components, but said there had been no impact on other global plants.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.