Featured Image

International News From the Field: China

China’s zero tolerance toward COVID continues to take its toll on the local economy, particularly in the automotive sector. This week we take a closer look at the local automotive supply chain data that has global economic implications.
May 18, 2022

China’s zero tolerance toward COVID continues to take its toll on the local economy, particularly in the automotive sector, where China leads the world in annual units produced. This week we take a closer look at the local automotive supply chain data that has global economic implications.

  • Jilin Province in Northern China experienced an outbreak of new COVID cases in early March, leading its capital, Changchun, to declare a new lockdown. FAW (Volkswagen, Toyota, Audi) plants had to suspend production of vehicles in mid-March, while a similar situation has been observed at Volkswagen and Tesla facilities in Shanghai in April.

  • Approximately 20% of China’s automotive production capacity has been affected by the recently announced lockdowns. Two major manufacturers whose total output is over 5.6 million units a year, Shanghai Automotive Group Co. Ltd (SAIC) and FAW, are now experiencing logistics and supply chain challenges, which will negatively affect Chinese automotive production in 2022.

  • As per the Chinese Association of Automobile Manufacturers (CAAM):

    • 2021 Q1 production was up 2% YOY, while sales were up only 0.2%.

    • March output hit 2.241 million units, while sales reached 2.234 million units, down 9% and 12% respectively YOY.

    • March EV output hit 465,000 units with sales of 484,000 units, a YOY increase of 110%.

    • March exports hit 170,000 units, shrinking 6% in comparison to February; YOY exports were up 29%.

  • The CAAM report says that the new lockdowns announced in March have dramatically impacted the automotive sector, putting huge pressure on the whole supply chain. The shortage of chips has not improved significantly, and the price of raw materials for power batteries is going up rapidly, which has further pushed up manufacturing costs and, consequently, final product costs. Automotive companies have been heavily affected, and expectations are that this scenario won’t change in the short term.

  • A new release from CAAM on May 11 shows the current scenario of the automotive sector in China, which has taken a major slide since the first quarter report above:

    • April output hit 1.205 million units, shrinking 46% YOY. Sales are down to 1.181 million units, shrinking 48% YOY

    • EV April output hit 312,000 units, shrinking 33% versus March but still shows a growth of 44% YOY. Sales reached 299,000 units, shrinking 38% versus March but growing 45% YOY.

  • The EV segment is still the main driver for automotive industry growth in 2022.

  • With the lockdowns announced in Jilin and Shanghai, FAW-Volkswagen, previously the No. 1 ranked automotive company in China, is now down to No. 2, while SAIC-GM and SAIC-Volkswagen are now down to third and fourth in the ranking, respectively.

  • In Shanghai, the automobile industry continues to be shut down. The core components for vehicle assembly in China, largely supplied by companies located in the Yangtze River Delta region, have had production levels heavily affected by the lockdowns.

  • Expectation are that this dire situation won’t improve until late July.

For more information, please contact Fred Qian at fredqian@AMTchina.org.

PicturePicture
Author
Fred Qian
General Manager - Shanghai Technology and Service Center of AMT
Recent international News
China's economic pulse, gauged by electricity use and excavator sales, showcases growth. Driven by recovery and electrification trends, the largest manufacturing nation shows positive signs of recovery. For more industry intel and other tidbits, read on.
China has good reason to celebrate the Year of the Dragon after a record-breaking 2023 for automotive production. Continued growth is expected, and demand for imported machine tools is increasing. For more industry intel and other tidbits, read on.
Are there still manufacturing opportunities in China? The world’s second-largest economy faces setbacks from the pandemic, uncertainty in real estate, and weakened global demand for its exports. For more industry intel and other tidbits, read on.
Foreign investment use in China shrank in 2023, but new measures are aimed at its increase. With stimulus and confrontations with structural slowdowns, is the economic recovery finally gaining traction? For more industry intel and other tidbits, read on.
Has the Chinese economy finally bottomed out? Are signs of stabilization an indication of a turnaround? Are there still opportunities in the automotive industry? For more industry intel and other tidbits, read on.
Similar News
undefined
International
By Arun Mahajan | Mar 19, 2024

India sees another rise in PMI and record export growth. The country's market is poised to skyrocket, particularly in defense and semiconductors, thanks to its surging economy and persistent reforms. For more industry intel and other tidbits, read on.

5 min
undefined
Technology
By Bonnie Gurney | Mar 18, 2024

While additive manufacturing has significantly matured, further development depends on the current market evolving, which will require developing opportunities to showcase it as well as changing how we think of it – that it's more than 3D printing a part.

6 min
undefined
International
By Conchi Aranguren | Mar 14, 2024

Europe's manufacturing sector faces declining domestic orders, geopolitical tensions, increased exports, and opportunities in the battery market. A very dynamic scenario is ahead for the old continent. For more industry intel and other tidbits, read on.

5 min