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China car industry hit hard by COVID curbs

China's auto industry is estimated to lose 20% of its production due to COVID-19 restricitions in Shanghai and its neighboring cities - a region, known as the Yangtze River delta, that accounts for 21.6% of the industry's total production nationwide, according to figures from an industry association.

The recent wave of outbreak in Shanghai has aggravated the plight of the auto industry. Several auto parts makers from Germany have established presence in the megacity.

During the city's lockdowns, Bosch suspended production at two of its factories in Shanghai and Changchun, while maintaining closed-loop operations at two other plants in Shanghai and its neighboring Taicang city, according to Reuters. ZF Group adopted closed-loop operations at its plants in western Shanghai, but its supplies were disrupted by logistic problems. ThyssenKrupp also halted production at its system engineering plant in eastern Shanghai.

Shanghai authorities are now allowing work to resume in the city, prioritizing those in carmaking and IC industries. Automakers are working to resume production.

Shanghai and Changchun house the headquarters of China's two biggest carmaking groups - SAIC Motor and FAW Group, both of which attract many component suppliers to their vicinity. These companies' suspensions will create ripple effects on other manufacturers, including those assembling cars in Anhui and Zhejiang, said Cui Dongshu, secretary-general of China Passenger Car Association (CPCA).

In addition to Shanghai, many auto parts suppliers choose to sit in its neighboring cities such as Suzhou, Wuxi, and Changzhou.

CPCA estimated that the outbreak in Shanghai and other areas will cause China's auto industry to lose 20% of its production.

Carmaking activities in the Yangtze River delta make up 21.6% of the industry's total, according to China's National Bureau of Statistics.

Seeing the pandemic as well as chip and power shortages deal relentless blows to local economy, Shanghai and Jilin authorities have started to ease restrictive measures and encourage businesses to resume activities.

Headquartered in Changchun City of Jilin Province, FAW Group suspended production at five plants in the city from March 13, but has restarted production since April 17. More than 25,000 workers of FAW's 276 suppliers have returned to work, according to Chinese media reports.

SAIC Motor on April 18 started to trial restarting production in Shanghai, after China's Ministry of Industry and Information Technology (MIIT) dispatched a task mission to the city to help "666 core businesses" restore operations. Its affiliates, Hasco and Anji Logistics, are also trying to resume work.

However, SAIC Motor management personnel said the group might not be able to entirely resume production in a short period. It will continue to monitor the pandemic's development and the company's trial results to determine its next steps, China's National Business Daily reported.

Tesla has reportedly resumed production at its gigafactory in Shanghai on April 19, where employees work on one shift, instead of two as before the city's lockdowns.

After resuming production, the plant's jobs per hour is projected to reduce from 80-85 to 40-45. While the electric vehicle maker keeps a stock of components that can last for about 2.5 weeks - equivalent to a monthly production of 25,000 to 30,000 cars. It is estimated that Tesla's Shanghai production would not return to pre-lockdown level until mid-May.

The Tesla Gigafactory 3 was suspended twice due to restrictive measures against the pandemic. After its production lines paused for more than 20 days, Tesla is estimated to have lost at least 45,000 units.