The Impact Of The Epidemic On The Global Automotive Supply Chain: China'S Auto Enterprise System Is Facing Challenges.

The spread of the new coronavirus pneumonia has caused the European auto industry to "stop".

In March 20th, the world's largest two auto parts suppliers in Germany, BOSCH and mainland, announced the end of their production in Europe after the multinational car companies, including Daimler, BMW, PSA and Renault, announced the closure of the vehicle production plant. Subsequently, Schaeffler, Ma Ruili, Valerie Buster, ZF and other multinational component manufacturers also said they would stop or slow down production in Europe.

Automobile production involves global procurement of tens of thousands of parts and materials, and any abnormal supply of small parts will have an impact on vehicle production. The disruption of individual or part suppliers on the upstream may lead to a "Breakage" crisis in the supply chain.

Auto parts giant shut down factories in Europe, which will impact the global automotive industry chain. At home, the supply chain system of major car enterprises has strong international characteristics, and some key components need to rely on imports. Chinese carmakers, which are gradually resuming production, are facing a new test of the global supply chain system.

"If foreign suppliers stop supply, they will have a great impact on China's auto industry. Although there is still a certain amount of inventory, the impact of enterprises in the short term is limited, but for a long time, there may be some problems. The key lies in the extent of the epidemic and the impact on local production, and the current epidemic situation in Europe and America tends to deteriorate. In March 23rd, Wu Songquan, senior chief expert of China Automotive Technology Research Center, told reporters in an interview with twenty-first Century economic report.

The impact on China depends on when to resume production.

China is the world's largest automobile production and marketing country, and is also one of the most important parts of the world. Although there are more than 10 auto parts enterprises in China and more than 1.3 Enterprises above Designated Size, and the annual market size exceeds 4 trillion yuan, there are still a large number of auto parts, materials and equipment imported from abroad.

According to customs statistics, the import value of auto parts in China was 36 billion 711 million US dollars in 2019. Among them, the scale of imports from Germany reached US $10 billion 280 million, and imports from Germany, Japan, the United States, South Korea and Mexico accounted for over 80% of the total imports of five countries. Wu Songquan told reporters that in 2019, automatic transmission and parts, engines and parts, body parts and other three parts did not list, imports accounted for more than 50%.

A head of the SAIC Datong plant told reporters on twenty-first Century economic report that there is still a certain stock of the relevant parts and components. It is expected that there will be little effect in a month and a half. He told reporters that the main components currently imported include connectors, chips, chemical raw materials and so on.

In twenty-first Century, the business reporter learned that China's imports of spare parts mainly include assembly / system, parts, materials, and basic components that cannot be produced or met in China. As China's auto production and sales scale continues to expand, multinational components such as BOSCH, mainland China, ZF, Wei Shitong, and Valeo have been localized in China, and many factories have been set up in China, but some of these enterprises' materials and basic components are imported from abroad.

"Most parts of Europe can be made domestically, but some of them consider common or universal parts, such as small plastic parts or heat treated stamping parts or seals, which are not worth investing in mold alone, so there is no localization." In March 23rd, a senior multinational auto parts supplier in China told reporters on twenty-first Century economic report.

Xu Daquan, executive vice president of BOSCH China, also told reporters that the German headquarters is striving to keep BOSCH China's demand.

Generally speaking, most of the imported parts of vehicle enterprises are in deep stock. However, if Germany, the United States, Japan and the Republic of Korea, because of the deterioration of the epidemic, parts enterprises and materials enterprises will stop production and stop supply, domestic enterprises will not be able to continue production after the inventory runs out, and the production of Chinese automobiles and parts will face a direct impact.

The above part of the enterprise executives told reporters that European imports generally have 4-8 weeks of inventory, if European suppliers now stop production, the impact has not been reflected. Whether or not it will affect in the future depends on factors such as the length of production and whether logistics will also be affected.

Test of supply chain system strength

Xu Haidong, Assistant Secretary General of the China Automotive Industry Association, told an economic report reporters in March 23rd that in March, China's automobile production and sales had noticeable recovery, and the rate of resumption of production was gradually increasing.

At home, in accordance with the provisions of different regions, automobile manufacturers began to resume production in February. Previously, because of the supply of spare parts and logistics problems in Hubei, a major automobile manufacturing province, it has affected the recovery of many auto plants.

At that time, many car companies began to comb their parts and components system, hoping to find new suppliers for some parts that could be replaced. However, a car dealer insider told the twenty-first Century business news reporter that because auto parts require a long product development and verification cycle, it is not easy to find suitable alternative suppliers in the short term, and quickly find substitutes for suppliers with low technical content.

These substitute parts suppliers are mainly local small and medium sized enterprises. Small and medium-sized enterprises are also an integral part of the supply chain system, which in turn may affect the entire supply chain. To a certain extent, this has already tested the supply chain system of the local auto industry.

At the same time, once the key parts imported from multinational parts enterprises are broken off, they will bring new impacts on the domestic automobile production and sales that are in recovery.

If a tiny component can not be imported in time, it will affect the production and sale of a car company or even an industry. For China's auto industry, which is affected by the epidemic, it is undoubtedly worse.

In 2019, China's auto parts exports exceeded US $60 billion, exceeding the scale of US $36 billion 711 million imports. However, it should be noted that there is a difference in the "gold content" between imported parts and export parts.

"Although China is a large country with parts and components, it has large scale and strong supply capability. Its import and export scale is large, and its exports are still larger than imports. However, what we are going out is different from what we import. Many parts and materials imported from China can not be supplied at home, and many of the components exported are actually replaces abroad." Wu Songquan told reporters on twenty-first Century economic report.

Multinational component giants hold a higher voice in the industry supply chain, and many parts they produce can not be replaced, even if they need time cycle. This also illustrates again that in the process of developing our country from a big automobile country to a powerful automobile country, it is important to enhance the core competitiveness of parts enterprises.

In a report issued by China Automotive Technology Research Center, suggestions were made to support automotive and parts enterprises in optimizing supply chain management and ensuring supply chain safety. The major auto enterprises should establish a strategic supply system for parts and components, strengthen cooperation with suppliers at home and abroad, optimize the layout of the supply system, and guide major Chinese brand enterprises to deepen cooperation in sharing supply chain resources.

But to a certain extent, the epidemic also gives the auto industry the ability to re-examine supply chain management. Any enterprise needs to further consider its own supply chain security problems, and strengthen the flexibility of the supply chain to cope with the "uncertainty" caused by the changes in the external environment.