Shanghai blockade, China’s auto industry “calls for help”

In a post on Chinese social media on April 14, He Xiaopeng, CEO of electric vehicle maker Xpeng, said that production at all auto assembly plants in the country could be halted if Suppliers in Shanghai and surrounding areas did not seek to lift the blockade order in May 2022.

Without exception, Richard Yu Cheng dong, head of Huawei’s automotive and consumer division, expressed similar concerns in a WeChat post: “If Shanghai is not opened in May, all businesses Technology and industrial companies with supply chains in the region will have to come to a complete halt, especially the auto industry. The economic damage to these industries could be huge.”

It is known that China is fighting the largest COVID-19 outbreak since the beginning of 2020 due to the highly infectious cluster of sub-variants BA.2 of Omicron. Shanghai and Jilin province are the two regions with the most COVID-19 positive cases, while both serve as major hubs for auto production, accounting for more than a fifth of national output in 2020.

According to the China Tourist Vehicle Association, a number of joint ventures of major auto manufacturers such as FAW Volkswagen, FAW Hongqi and SAIC General Motors saw production output drop by more than 30% in March, 2022 alone.

Some factories in these two areas have planned for employees to stay at the company to work during the blockade. However, with too many shipments being cut, many units had to close factories after running out of necessary components and solutions.

“Sales momentum in the auto sector from 2021 will be lost almost entirely due to the pandemic,” said Tu Le, CEO of consulting firm Sino Auto Insights.

According to the China Association of Automobile Manufacturers, in 2021, auto output and sales in China grew by 3.4% and 3.8% a year, respectively, breaking a three-year series of declines caused by COVID-19.

Sixth Tone quoted Director Tu Le as saying that fully restoring auto production to the levels achieved in 2021 will take at least three months after the pandemic is under control.

Earlier, on March 28, Tesla announced the closure of its Shanghai Gigafactory in Shanghai when the local government imposed a two-stage blockade order in the entire city. According to information from Reuters, this factory will reopen on April 18, 2022.

As for new energy vehicle maker Nio, it suspended production at its assembly plant in the eastern Chinese city of Hefei on April 10, after parts suppliers in Shanghai, Jiangsu and Jilin suspend production. However, the factory reopened after 4 days thanks to a slight recovery in the supply chain.

In his post, Xpeng CEO He Xiaopeng expressed his appreciation and called for more government support and action: “The good news is that the local government is stepping up and coordinating efforts to solve the problem. solve problems”.

Director Tu Le said: “The government needs to work with the industry in general and the auto industry in particular to jointly come up with measures to allow production to be quickly restarted. And once it’s resumed, find ways to prevent any new outbreaks to keep production running undisturbed. The outbreak of the disease and then being controlled but not completely will only make the situation of industries worse.”