Auto sector looks to stabilize supply chains

Automotive manufacturers in China are working to ensure the stability of their global supply chains amid disruptions caused by the coronavirus epidemic.

For automakers, obtaining supplies of components is critical to maintaining vehicle production. Automakers such as Ford and General Motors are taking emergency steps to safeguard their supply chains amid the COVID-19 outbreak.

According to data from UBS, Chinese production of auto parts accounted for about 27 percent of global production in 2019. China's share of global exports of auto parts was about 8 percent last year.

As one of the world's most important auto parts producers, China is vital for multinational car manufacturers.

To make ends meet, SAIC Motor’s SAIC Anji Logistics has arranged 16 charter flights to transport parts to General Motors plants in North America, Brazil and Argentina. 

On February 25, China Eastern Airlines cargo flight CK227 took off from Pudong International Airport to Chicago with GM auto parts. The flight carried a total of 422 units of vehicle components weighing 80.45 tons.

Matt Tsien, GM 's executive vice president and president of GM China, said that for automotive industry, the challenges brought by the epidemic are not only limited at the car sales level, but also at the industrial chain level.

"In China, GM produces cars and also purchases auto parts to support global production," said Tsien. "At present, GM's factories and dealers in China are gradually returning to work and our global supply chain is running smoothly."

On the same day, US automaker Ford also transported its 94 tons of auto parts through a charter flight from Pudong International Airport to Bangkok, Thailand. Ford has two automobile manufacturing plants in Thailand.

Wang Zeming, general manager of SAIC Anji Logistics, said that "Shanghai is the car manufacturing center for our country and most of the auto parts are exported from Shanghai to the world."

Wang added that setting up a global supply chain information system and operation team which is agile, reliable, collaborative and responsive will play a decisive role in the development and operation of international business.

In addition to charter flights, shipping is also a way for multinational car companies to move components. The Shanghai Haitong International Automobile Terminal has completed a delivery of 30,000 sets of components to Thailand and 2,000 sets to India.

Richard Lebovitz, chief executive officer of cloud-based actionable intelligence company LeanDNA, said that "a lot of times manufacturers are working on 5 percent or 10 percent margins. The cost of transporting parts by charter flights will increase costs by 10 percent to 30 percent."