Volkswagen Delays Reopening Production Plants Over Coronavirus, Major Auto Show Postponed

Volkswagen logos are pictured during the media day of the Salao do Automovel International Auto Show in Sao Paulo, Brazil, on Nov. 6, 2018. Paulo Whitaker/Reuters

Volkswagen said that it has postponed the start of production at all Chinese plants that it runs in partnership with China’s SAIC, the joint venture between Volkswagen and Saic Motor Corp, due to concerns over the coronavirus outbreak.

The German carmaker, which operates 33 plants in various locations in China, on Tuesday cited “supply-chain and logistical,” issues among some of the reasons for the delay.

“We are working hard on getting back to our normal production schedule, while facing delays due to national supply chain and logistics challenges as well as limited travel options for production employees,” Nikolas Thorke, spokesman for Volkswagen’s China operation, told Deutsche Welle.

However, the company expects to resume production on Feb. 24, according to DW. Meanwhile, production at some of the plants that VW runs with the Chinese FAW Group resumed on Feb. 17, with the remaining plants expected to be back to normal operations in the coming days.

Volkswagen had initially ceased production in Chinese plants on Jan. 23 as the new coronavirus, also known as COVID-19, continues to spread throughout the country, causing havoc to both national and international businesses.

The new disease first emerged in the Chinese city of Wuhan in late December last year, and has quickly spread to 29 countries.

Analysts at Swiss investment bank UBS said they expected car sales to halve in China in February due to ongoing fears over the virus, while a loss in production capacity of more than 20 percent is anticipated in the ongoing quarter.

Unlike Chinese and U.S. makers, German automakers have been leaders when it comes to innovation, and partnerships in China and have continued to steadily increase their market share in the East Asian country.

According to DW, China accounts for 4 out of every 10 Volkswagen cars sold worldwide and almost 3 out of every 10 BMW or Mercedes cars delivered globally.

In 2018, Volkswagen committed €15 billion ($17.6 billion) to research in China on topics such as e-mobility, connectivity, and autonomous driving, and CEO Herbert Diess said the company would be “systematically expanding its partnerships” in the country, according to CNN.

Also this week, Auto China—also known as Beijing International Automotive Exhibition and Beijing Motor Show—which is the dominant auto show held in Beijing every two years, postponed its upcoming event from April 21 to 30 this year.

In a statement organizers said the event, which typically attracts over 800,000 visitors, was postponed to “ensure the health and safety of exhibitors and participants,” but noted that it would be rescheduling in the future.