• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Top Carmaker Shutdowns Hint More to Come in Covid-Zero China

Top Carmaker Shutdowns Hint More to Come in Covid-Zero China

Toyota
An employee performs a quality check on an engine part at a Toyota Motor Corp. manufacturing facility. Photo: Bloomberg.
January 19, 2022
Bloomberg

China’s zero tolerance approach to Covid has idled Toyota Motor Corp. and Volkswagen AG factories the past week, a troubling sign for global carmakers as the omicron variant begins to spread in the world’s biggest auto production hub. 

The two top-selling carmakers’ factories in Tianjin, 108 kilometers (67 miles) southeast of Beijing, have been halted since Jan. 10 as the local government carries out multiple rounds of mass testing for the city’s 14 million residents.

The disruptions caused by China’s strict Covid-Zero policy are sparking broader concerns about what the months ahead will look like for manufacturers operating in China, which has imposed strict quarantines and mass testing to stamp out infections. The clash between those policies and the omicron variant could put further stress on already strained supply chains, given the country’s role as a manufacturing powerhouse. 

The strategy “will have a global impact given the role China still plays in the global autos supply chain,” analysts at Fitch Solutions wrote in a recent report, adding that lockdowns will probably impact carmakers indirectly as well through their wider supply chains. 

Fitch sees the recovery of global vehicle production now being delayed until 2023 due in part to high rates of new omicron infections and localized lockdowns, “especially in China with its Covid-Zero strategy.” 

Read more:
There’s No End in Sight for Chip-Constrained Auto Sales Slump
Watch: Lessons From — and for — Toyota About Risk Management
How One Covid Case Upended Toyota’s Just-in-Time Supply Chain

Domestic and foreign-owned car plants in China churn out about 25 million cars a year — around one-third of all vehicles globally, according to the International Organization of Motor Vehicle Manufacturers.

On Saturday, the Tianjin municipal government mandated a third round of testing for its citizens, uncovering 59 new cases of the virus. With companies unable to resume operations until employees test negative and receive a green light from local authorities, the repeated rounds of testing are fueling concern among businesses. 

Toyota’s venture with China FAW Group Co. in Tianjin is based in the city’s western Xiqing district, which has sealed off some neighborhoods due to the detection of Covid infections. The joint operation has an annual production capacity of more than 500,000 vehicles. 

VW said its plant on the other side of the city, which produces around 300,000 cars a year including the Audi Q3, has been temporarily shut down due to parts shortages and pending test results of workers. 

The omicron variant has led to record case numbers across Europe and the U.S. In China, after the first sign of a virus flare-up, cities have been known to test their entire populations as many as 10 times to keep infections under control. 

China is a central player in many automotive-parts supply chains, especially for electric vehicles. The country’s Covid policies will likely worsen the existing shortage of batteries, presenting a “major risk” to EV production, according to the Fitch report.  

Indeed, broken links in the auto parts supply chain are already appearing in Tianjin, a sign that disruption to output may linger even after city officials allow business activity to resume. 

A gearbox supplier controlled by VW and Rohm Co. were among operations that were halted last week. Some shifts at the VW component factory resumed Jan. 13, and the German automaker said it hopes to catch up with lost production.

RELATED CONTENT

RELATED VIDEOS

Global Supply Chain Management Global Trade & Economics HR & Labor Management Automotive Industrial Manufacturing
  • Related Articles

    Lunar New Year Without China’s COVID Zero Policy to Put Airlines to the Test

    Will the End of ‘Zero COVID’ Stabilize China’s Economy?

    China Abandons Key Parts of Zero-COVID Strategy After Protests

Bloomberg

BioNTech Expands German Plant as Scholz Vows to Help Pharma

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • A WORKER IN A WAREHOUSE, SUPERIMPOSED WITH GRAPHICS SHOWING SUPPLY NETWORK

    Enabling Intelligent Visibility With Supply Chain Analytics

    Data Management (Big Data/IoT/Blockchain)
  • GSCMS-Promo.png

    Watch: Introducing the Global Supply Chain Marketing Summit

    Education & Professional Development
  • A HAND TURNS A LARGE, LIGHTED DIAL WITH THE WORD RISK ON IT iStock-NicoElNino-1364371014.jpg

    Measuring KPIs and KRIs for Comprehensive Supplier Performance Management

    Technology
  • DEEPLY CRACKED EARTH UNDER A BLUE CLOUDY SKY

    Why Maritime Supply Chains Must Adapt to Sustainability Regulations

    Ocean Transportation

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing