Commentary on Political Economy

Saturday 8 February 2020

Chinese car and auto-parts factories may stay closed longer than expected because of the coronavirus, increasing the chances that assembly lines in Asia, Europe and the United States could grind to a halt because of shortages of components.
Several automakers including BMW, PSA and Toyota have delayed restarting their assembly lines in China by another week, and others appear likely to follow suit. Even a relatively brief interruption in the flow of parts and materials could have far-reaching effects, analysts said.
The shutdowns at Chinese factories have hit automakers from several angles. The virus is already causing them to lose sales in China, the world’s largest car market by far. If they are forced to shut down factories outside of China because of parts shortages, as Hyundai has already done in South Korea, they could also lose sales in other regions.
The blow to the auto industry, which employs eight million people worldwide, comes at a time when output from the world’s factories is already sagging. It is likely to amplify the human and economic cost of the outbreak.

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