Due to the long automotive industry chain and high coordination requirements, the production and logistics bases of core components have been discontinued, and the radiation range is wider.
Text | Zuo Maoxuan
"If supply chain companies in And around Shanghai can't find a way to dynamically resume work and production, all Chinese automakers may have to stop work and production in May." On the evening of April 14, a circle of friends message from He Xiaopeng, chairman of Xiaopeng Automobile, pointed out the huge challenges facing the current automobile industry.
However, he also said that the good news is that some ministries and authorities are doing their best to coordinate, and expect more governments and authorities to support and work together.
On the morning of April 15, Yu Chengdong, CEO of Huawei's consumer business and CEO of Smart Car BU, also posted in the circle of friends that if Shanghai cannot resume work and production, all technology/industrial industries involving Shanghai's supply chain after May will be completely shut down, especially the automobile industry.
"It should not be (completely discontinued), see how to save yourself." On April 15, Cui Dongshu, secretary general of the All-China Passenger Transport Association, said in an interview with the think tank Jun that the pressure on national automobile production and sales in April was indeed very large.
Jilin Province and Shanghai Are Important Automotive Production Bases in the Mainland Automotive Industry, and the entire automotive supply chain is facing challenges in addition to the suspension of local enterprises due to the epidemic.
On April 9, WEILAI Automobile said that due to the epidemic, supply chain partners in Jilin, Shanghai, Jiangsu and other places have stopped production one after another, which has affected WEILAI's suspension of vehicle production. On April 14, NIO's Hefei production base is gradually resuming production from April 14, but the follow-up production plan depends on the recovery of the supply chain.
On April 13, Great Wall Motor's tank brand also said that due to the impact of the epidemic in Shanghai, Jiangsu, Jilin and other places, 8 supplier partners of the tank 300 model stopped work and operation, and the production of the tank 300 model was suspended from April 14.
Under normal circumstances, in the complex and lengthy automotive industry supply chain, often around the leading vehicle enterprises to build the automotive industry chain, Jilin, Shanghai are the location of FAW, SAIC, the two places of automobile production are ranked in the top three in the country. Among them, Shanghai is the core hub of China's high-end auto parts enterprises, and plays an important role in the mainland auto industry around the Supply Chain of the Yangtze River Delta automobile industry in Shanghai.
Some people in the automotive industry told the think tank Jun that from the perspective of the industry law of parts and components, under normal circumstances, large parts and accessories will be produced nearby, and some small and fine core components will be centrally purchased. Many important parts of multinational parts companies such as Bosch and Aptiv are produced in the Yangtze River Delta, so the supply chain impact will affect car companies in other parts of the country.
On April 11, Bosch said in a statement that in order to comply with the epidemic prevention and control measures, a factory in Shanghai that produces domestic hot water systems and an auto parts factory in Jilin have suspended production. However, Bosch's auto parts factories in Shanghai and Taicang are still "closed-loop production".
Bosch said it is currently seeing a temporary impact of epidemic prevention and control measures on logistics and supply chain procurement. In this case, everything possible is being done to maintain the supply chain.
In addition, the automotive supply chain system is often composed of top-down auto companies, first-tier suppliers, second-tier suppliers, third-tier suppliers, etc., one of which is affected, which may affect subsequent supply partners.
"I didn't expect to work, and I worked two or three days a week." The main thing we lack here is chemical materials, and the supply side is mainly from Zhangjiang, Shanghai. Some auto parts people told the think tank Jun.
Some independent car companies told the think tank Jun that the general car companies will have spare parts reserves, but considering the capital, cost and other factors, most suppliers are years of cooperative relations, mutual trust, usually the inventory will not be particularly much, if the supply chain partners can not supply the follow-up, it will indeed affect the subsequent production.
"There are some parts that need to be 'dumped' to be produced first, that is, the missing parts are not installed at the time of final assembly, and after the production line, they will be repaired after the parts arrive, but now it is not serious enough to completely stop production." A quality engineer at a joint venture car company in Beijing told the think tank Jun.
Similar to this lack of parts of the "flinging" production method, in the case of the shortage of automotive chips last year, it is actually not uncommon.
However, the impact on the automotive industry this time has indeed exceeded expectations.
According to the data of the Federation of Passenger Vehicles, in the first week of April this year, the wholesale sales of the narrow passenger car market averaged 24,000 units per day, down 39% from the same period last year and down 45% from the average of the first week of March this year, a decline that exceeded expectations.
"Car companies are facing a complex marketing environment, and the pace of production and marketing is relatively passive. April of the calendar year is the golden period for the release of new cars, and the listing of new products has greatly promoted the popularity of the market and the sales of manufacturers. Cui Dongshu, secretary general of the Association, said.
He said that due to the long automotive industry chain, high coordination requirements, the suspension of core parts production and logistics bases, and the wider radiation range, the production and market pressure of the automobile market in April may be very large.
The Boston Consulting Group pointed out in a report that since the beginning of 2020, the automotive industry supply chain is facing unprecedented challenges, from the new crown epidemic, chip crisis to geopolitical conflicts, black swans continue to stimulate the nerves of Autobots. The industry as a whole suffered a large loss in 2021, and production expectations for 2022 are not ideal. These crises are not isolated events, the recent outbreak in Shanghai has led to the short-term shutdown of many OEMs in Shanghai, further proving the fragility of the automotive industry's supply chain and the lack of understanding and control of risk information.
According to the Boston Consulting Group, enterprises urgently need to establish effective risk monitoring capabilities in the existing supply chain system to quickly and accurately assess the impact of major risks on corporate sales and profits, and formulate corresponding emergency measures, which will become an inevitable move in the strategic planning, management and implementation of the company's supply chain.
In addition, in order to further enhance the resilience of enterprises in the complex environment, enterprises also need to improve their core capabilities in the following areas: supply chain strategic design, dynamic integrated supply chain planning, end-to-end supply chain data transparency and collaboration, and operation model optimization.