Fiat Chrysler has warned that one of its European plants will be forced to halt production in a matter of weeks, as it struggles to source key parts from Chinese suppliers battling the coronavirus outbreak.
The warning from FCA is the first time that a global car company has raised the spectre of a European plant closing, underlining the risk to global supply chains from a virus that has been declared an international emergency.
Chief executive Mike Manley said four suppliers in China had been affected by the outbreak, with one “critical” maker of parts putting European production at risk.
“We’ve got one high risk supply at the moment that we have identified,” he told the Financial Times.
Within two to four weeks, the company would know “whether supply will be halted for one of our [European] plants”, he added without identifying which one.
The other three component makers “will also become critical” if the Chinese closures remained in force throughout February, he added.
Toyota, Hyundai, Volvo and PSA, the owner of Peugeot, are among the carmakers to have disclosed that coronavirus is disrupting their supply chains or risks doing so.
A team within FCA has been directed to monitor the company’s parts and any potential production impact, including seeking alternative sourcing. However, that process took time because new components had to be certified and registered, said Mr Manley.
Earlier on Thursday, Masayoshi Shirayanagi, Toyota’s chief operating officer, said the company was “currently scrutinising every single component, our inventory and the possibility or the need for alternative production plans”.
France’s PSA, meanwhile, cautioned that it faced “logistics tensions” because of the supplier disruption, but did not anticipate shutdowns of any non-Chinese sites in the “very near term”.
Fresh signs of the fallout for the car industry came after FCA posted a 19 per cent drop in net profit to €2.7bn, with a stronger final quarter cushioning the drop in earnings. The group generated €1.6bn of net income in the final three months, helped by record results in North America.
Source: Economy - ft.com
