More auto brands double down on stocks, parts due to coronavirus outbreak

Nearly two months into the latest viral outbreak caused by the 2019 novel Coronavirus that originated in Wuhan in China, the global auto industry—bracing for the outbreak’s impact—still has to come to terms with its long-term effects. The nCoV outbreak—as reported by Inquirer Motoring last week—has wreaked havoc on world markets, transport, logistics, and travel industries, and has exposed the vulnerabilities of a global market that has grown dependent on a single nation for its manufacturing and supply chains.

Indeed, what the nCoV virus has been able to do, apart from infecting over 43,000 people and killing 1,016 of them (so far), is slowing down the economy of a global superpower, and in the process adversely affecting the economies of the rest of the world. In this context, with China making—and buying—more cars than any other country, we can say that among the 2019 nCoV’s many victims has been the automotive industry.

CNN reported last week that Volkswagen, Toyota, Daimler, General Motors, Renault, Honda and Hyundai have been among the global carmakers who had invested heavily in China. These brands formed partnerships with local companies for manufacturing and building vast factories.

The Japan Times reported on Feb. 7 that the closures at Toyota’s four auto plants in Tianjin, Chengdu, Changchun and Guangzhou are expected to be extended until sometime after Feb. 17. The decision reflects local logistics and parts-procurement conditions, a Toyota spokeswoman told the publications.

The Wall Street Journal reported also on Feb. 7 that disruptions caused by the coronavirus outbreak have forced auto makers and their suppliers to render idle plants across China, rattling the industry’s global supply chain and posing another challenge for companies already facing slowing sales and declining profitability.

Bloomberg reported that the influential research firm IHS Markit sees a scenario in which the coronavirus spreading rapidly across the country triggers a cascade of plant closings that lasts into mid-March and reduces output by more than 1.7 million cars — a decline of another 32 percent.

In their bid to assuage their local clients’ concerns, car companies in the Philippines have been issuing statements, assuring Filipino buyers that there are more than enough stocks in parts and units for the country.

During the past couple of days, more automotive brands have come out to say that car buyers and owners need not worry about their vehicles and parts supplies.

British marque MG, owned by Chinese automotive giant SAIC Motor Corp. Ltd and represented in the Philippines by The Covenant Car Company Inc. (TCCCI), has said, through TCCCI president and CEO lawyer Alberto B. Arcilla, that “TCCCI has been coordinating with our principals at MG and so far we have not received any indication of delay in the delivery of parts ordered as well as with the production schedules for the units. Our ordering cycle has always been on a three-month production cycle. We have been secured as to the availability of our requirements for the next three months and we hope that this situation will continue and help us provide the requirements while the health issue is being addressed and contained.”

As for the Chevrolet brand that TCCCI also carries, Arcilla said, “Currently for Chevrolet in the Philippines, we do not have models and CBUs (completely built-up units) coming from China. Our Sail model which was previously sourced from the Shanghai plant was discontinued two years ago. Parts for this model have sufficient stock based on the current car parc.”

Arcilla added: “For Chevrolet, our units and parts come from other source plants, Thailand, Korea and North America. Though we can expect that these source plants may use parts that are manufactured in China, we at TCCCI have ample inventory of fast moving and maintenance parts.”

According to the General Motors China website, there are at present four major manufacturing bases for the SAIC-GM joint venture (Shanghai, Yantai, Shenyang and Wuhan), and are home to eight vehicle plants and four powertrain plants.

“We are hopeful that this health issue will be contained and addressed soon. However, in the event it will continue, we are already coordinating with our principals as to the availability of parts from other sources. As of this time, we have not received any indication that there will be a shortage of parts based on our car parc and current inventory,” Arcilla reiterated.

United Asia Auto Group Inc. president Rommel L. Sytin (Foton distributor/manufacturer and Chery distributor) said: “We have enough inventory of stocks to last us for the next few months. But we’re constantly in touch with our principals from the head office to monitor the situation so we can be able to make longer-term decisions moving forward. Rest assured that our local operations here are not affected by the logistical measures being done globally to ward off the spread of nCoV.”

Nicky Mariano, sales and marketing director of Legado Motors Inc, said: “As the official distributor of GAC Motor, we are confident that we can supply the vehicle and spare parts requirements in the country for the next six months. We are in constant communication with our principal at GAC and (there is) no major impact for us. We are confident that China can overcome this 2019 nCoV and return to normal operations for all industries concerned.”

Inquirer Motoring asked Volkswagen Philippines, Hyundai Asia Resources Inc., and Honda Cars Philippines Inc. about their models’ spare parts and unit availabilities, but did not issue a statement as of presstime.

Inquirer Motoring also tried to get a statement from several oil companies, but they also declined to comment.

On Jan. 31 however, CNBC reported that the 2019-nCoV outbreak disrupted oil prices, plunging the commodity into bear market territory after hitting a high in early January amid tensions between the United States and Iran. It also reported that OPEC (the Organization of Petroleum Exporting Countries) and its allies were considering moving up their March meeting to discuss deepening their production cuts, amid worries the coronavirus would significantly curb demand.