Global Automobile Production Halts Amid China’s Zero-Covid Policy

As protests across China erupt over increasing COVID-19 restrictions, car manufacturers across the globe have begun worrying about the effects these restrictions could have on global automobile production. 

Automakers like Honda, who shut down production in Wuhan along with its lawnmower factory in Chongqing in early 2020, have yet to reopen their factory doors.

The latest outbreak in China is causing even greater strain over the market’s ability to bounce back after years of supply chain disruptions, inventory shortages, and subsequent sales.

The COVID wave is now affecting a handful of automakers in China who are trying to meet the demands of production. In particular, the vast increase in electric vehicle demands.     

Here’s a look at the current lockdown situation in China that is causing chaos in the world’s largest automotive market.

Automakers response to global automobile production delays

BMW’s CEO, Oliver Zipse, recently told Automobile News Europe, “I am worried about how we get out of the lockdown situation in future quarters. There is no visibility that China has a solution.” The most recent shutdown comes as a major concern for BMW as the demand for electric models continues to rise both domestically in and on a global scale. 

German powerhouse, Volkswagen, on the other hand, is suffering from component shortages. This has caused them to shut down its joint venture factories with China FAW Group in Chengdu, In addition, they have closed part of their production lines in Changchun. 

Ultimately, the strict restrictions in China are impending an even worse outcome for the automotive industry and future sales. While pre-pandemic days are far behind us, China’s worst outbreak in two years is signaling times of the past.

Authorities have taken strict measures to prevent the further spread on the virus, with a reported tens of million people under lockdown in cities across the country.

COVID restrictions continue to limit workers’ quality of life in China

The repercussions of the restrictions extend well beyond production line issues. Although it goes without saying that safety is first and foremost, many argue the conservative COVID-19 measures in China have gone too far. More social decisions come into play as well, such as forcing workers within factories to continue production under China’s uncompromising “Zero-COVID” policy.

Companies, such as Tesla, recently came under fire as well for the extreme treatment of workers in Shanghai. Reports show employees were urged to sleep on factory floors between shifts rather than go home to reduce the risk of exposure. With all things considered, the Chinese citizens have begun fighting back against such policies. 

Not only do automakers face an uphill battle to resume production, civilians are fed up with the current guidelines.

Can car makers afford to halt protection within a country responsible for 32.5% of the world’s manufacturing?

According to F&I Tools, China ranked #1 in car sales in 2021, a position they’ve held for over a decade. Not to mention, electric vehicle sales have nearly doubled within the last year. Consumers are shifting towards more eco-friendly options compared to years past. The question now is, “Can carmakers afford to halt production in a place that accounts for the biggest sales? Not even factoring its stronghold over production. 

The simple answer is no. The current political issue in China and rising spread of COVID-19 is a situation that must be resolved in order for automakers to survive this global economic crisis. While we suspect the recent lockdowns will spill over into 2023, the long-term effects of this recent outbreak could be tremendous for global automobile production as a whole. 

Tell us what you think about the COVID-19 lockdowns across China and its resulting impact on automotive manufacturing.