Automakers resume or prepare to restart car production in China amid coronavirus outbreak

Key Points
  • Several automakers are reopening or preparing to restart factories in China on Monday after an extended holiday shutdown due to the coronavirus.
  • Ford restarted vehicle production on Monday at its plants in China and Tesla also has reportedly resumed production in the country.
  • Other automakers such as GM and Japan's largest automakers are preparing to restart their China operations in the coming days and weeks.
A Ford Escort on display at a Ford dealership in Shanghai, China, on Thursday, July 19, 2018.
Qilai Shen | Bloomberg | Getty Images

Several automakers on Monday reopened or are preparing to restart factories in China after an extended holiday shutdown due to the coronavirus, which is now responsible for more than 900 deaths in the country.

Ford Motor resumed vehicle production at its plants in Chongqing and Hangzhou, according to Anderson Chan, a company spokesman. It's unclear when the facilities will fully reopen to their capacity before the shutdown, which started late last month. The Dearborn, Michigan-based automaker operates six assembly plants in the country.

"We are taking a gradual approach in ramping up production operations, based on market demands and without compromising the safety of our employees," Chan said in an emailed statement to CNBC. "We are carefully monitoring the situation and working closely with relevant government authorities and stakeholders in planning and acting accordingly."

Tesla, according to Reuters and local media reports, on Monday reopened its Shanghai gigafactory. Tesla on Jan. 30 said it expected a one to one-and-a-half-week delay in the ramp of its Model 3 sedan as a result of the epidemic. Spokespeople for Tesla did not immediately respond to a request for comment.

Other automakers such as General Motors and Japan's largest automakers are preparing to restart their China operations in the coming days and weeks, according to officials.

Elon Musk, chief executive officer of Tesla Inc., speaks during a ceremony at the company's Gigafactory in Shanghai, China, on Tuesday, Jan. 7, 2020.
Qilai Shen | Bloomberg | Getty Images

China's National Health Commission on Monday said there have been more than 40,000 confirmed cases of the coronavirus in the country, with more than 900 deaths due the deadly pneumonia-like virus. The epicenter of the virus is believed to be Wuhan, a major auto hub and home of Dongfeng Motor, one of the largest and most diversified joint venture automakers in China.

GM spokesman Jim Cain on Monday told CNBC that the company – the largest U.S. automaker in China – plans to start reopening its 15 assembly plants in the country over a two-week period starting Feb. 15. The tiered openings, he said, would be based on supply base availability, employee health concerns and local government recommendations.

Toyota Motor this week is preparing its four plants to resume operations starting "the following week and beyond," according to a company statement Friday. Eric Booth, a spokesman for Toyota, confirmed those plans remain on Monday, declining to elaborate on details of the reopenings.

"The safety and security of our team members, suppliers and stakeholders continues to be our top priority," Toyota said in an emailed statement. "We will continue to evaluate the situation."

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Nissan Motor on Monday confirmed it is "preparing to restart production in China at the earliest from Feb. 17" at its plants in Huadu and Dalian, both located hundreds of miles away from Wuhan. Restart dates for other facilities will differ by plant, according to an emailed company statement.

Due to supply shortages of parts from China, Nissan also plans to temporary halt production in Kyushu, Japan, on Feb. 14 and Feb. 17. The company declined to supply additional details on the shutdowns.

Honda Motor on Friday said it planned to restart production at its plants in Wuhan on Feb. 13. A company spokesman on Monday confirmed those plans, however Japanese newspaper Nikkei has reported that Honda will aim to restart production in the Wuhan area on Feb. 17.

Hyundai Motor last week said it would idle all seven of its plants in South Korea because of a lack of parts from suppliers in China.

It will likely take companies two to three weeks to regain full production once they reopen, according to Jeff Schuster, president of the Americas and global vehicle forecasts at LMC Automotive.

"It's going to be a slow go. It's probably going to have starts and stops. As things do get back up and running, there will be some bumps along the way," he told CNBC on Monday. "Time is really what it takes at this point."

LMC expects auto production in China to decline by about 800,000 units, or 3% to 5%, this year due to the coronavirus. That includes about 1.2 million units in the first quarter with automakers recouping some lost production later in the year.

The Wuhan area is expected to have the longest delay in restarting production, according to Schuster.