Covid lockdowns wreak havoc in the world’s largest auto market

Hong Kong
CNN Business

Factory closures, new model launches delayed and sales slump. China’s massive auto market has been plunged into disarray due to the recent wave of Covid in the country, with strict lockdowns in many cities hitting auto production.

The worst outbreak of Covid in China in two years has prompted the authorities to step up the country’s non-proliferation policy, leading to the closure of many major cities and tens of millions of people.

Strict lockdown measures in places like Shanghai and Jilin province have forced automakers to shut down manufacturing and risk delaying shipments at a time when global demand for vehicles is strong.

The company said on Monday that Volkswagen plants in Shanghai and Changchun, the capital of Jilin Province, have been closed for weeks.

“Due to the current situation of Covid, production at our plants in Changchun (since mid-March) and Anting/Shanghai (since April 1) is currently suspended,” Volkswagen said in a written response to CNN Business. “This is currently causing production delays.”

The company added that it will compensate for the halt in production “If the situation calms down in the near future,” through additional transformations and other measures. “At present, we are assessing the situation from day to day,” she added.

Employees check the inspection line during an informational tour of Nio Inc.'s production facility.  In Hefei, Anhui Province, China, on Friday, December 4, 2020.

Chinese electric car maker Nio (NIO) said Saturday that it has suspended production due to disruptions related to Covid.

“Since March, due to the epidemic, the company’s supplier partners in several places including Jilin, Shanghai and Jiangsu have suspended production one by one and have not yet recovered,” the company said in a statement. “As a result, Nio has stopped production of cars,” she said, adding that the company will postpone the delivery of its electric vehicles to users.

It’s not just individual manufacturers. The Beijing Auto Show, one of the world’s largest gatherings of the industry, has been postponed until further notice due to the recent surge in Covid cases. The event was originally scheduled to take place from April 21 to April 30.

“We will pay close attention to the development of the epidemic,” the General Secretariat of Auto China said in a post on its official WeChat account on Saturday, adding that it will announce new dates in due course.

This means that many new car launches will be delayed. Chinese electric car makers Nio, XPeng and Li Auto previously said they would unveil new models at the Beijing Auto Show.

Covid restrictions have also affected car sales in the country.

Auto sales in China fell 12% in March from a year ago, reversing a 19% increase in February, ending two consecutive months of growth, according to data from The China Association of Automobile Manufacturers showed on Monday.

The association attributed the decline to the recent surge in Covid cases.

Monday’s data showed one bright spot, though – China’s demand for electric vehicles remains strong.

About 455,000 new energy vehicles, including hybrids and pure electric vehicles, were sold in March, up 122% from a year ago, according to separate data from the China Passenger Car Association.

Tesla (TSLA) sales in China were particularly strong, ranking as the number one pure electric brand.

The company delivered 65,814 Chinese-made vehicles in March, and the majority of those vehicles were sold in the Chinese market. This number was 85% higher than last year.

Meanwhile, BYD (BYDDF) sold the most new energy vehicles in China, delivering 104,878 units in March. Among them, 53,664 were pure electric models.

Tesla did not immediately respond to a request for comment on its March sales numbers.