Auto enterprises in Wuhan resume production

Automobile is the most critical industry in Wuhan and Hubei province as it plays a significant role in domestic and even global supply chain. With the epidemic gradually coming under control, auto enterprises in the city, led by Dongfeng Motor, resume production, and drive the robust recovery of car parts production upstream and downstream, according to a Hubei Daily report on Tuesday.

"Three factories have all resumed production, and the automobile output has increased accordingly," Zheng Chunkai, executive vice-manager of Dongfeng Honda was quoted by the paper. He added that automobiles' tier-one suppliers have also resumed normal production.

Dongfeng Honda, the largest industrial enterprise in Wuhan, runs three factories in the city and produces over 3,000 cars per day. Last year, its production hit 792,000 units with an output value of 135 billion yuan.

Affected by the epidemic, however, daily output fell sharply, with only 1,000 cars produced in the first three months of 2020. "We received orders of 25,800 units this month and have delivered nearly 18,000 cars through the stock, but several distributors face stock shortage," Zheng said.

As the spread of virus has been basically curbed in Hubei and people resume work across the country, vehicle market demand is seeing a significant rebound. Therefore, the production needs to be speeded up as soon as possible.

"Since the company resumed work last week, production capacity has gradually recovered to 50 percent of the normal standard," Zheng said. "We have 4,500 to 5,000 workers on duty one shift a day." With about 10,000 workers all coming back to work next month, the capacity will progressively get back to normal running on two shifts.

The full operation of automobile factories will not be possible without sufficient supply of car parts and various raw materials. Dongfeng Honda, which has over 500 tier-one suppliers across the country, has taken multiple measures to deal with the logistics.

"We have built five transportation networks along different cities to Wuhan combined with highway and railway," Zheng told Hubei Daily. "The transportation capacity has reached 112 carriages per day just like normal times."

Apart from Dongfeng Honda, the independent brand of Dongfeng Automobile Company - Dongfeng passenger vehicles, with its main market in Hubei, was also hit by the epidemic in both production and sales.

"Currently, 95 percent of our 4S stores have reopened except those in Wuhan and Xiaogan," said Liu Hong, vice-general manager of Dongfeng passenger vehicles assembly shop.

The enterprise has resumed work since March 12, and the output has risen from nine to 24 cars per hour, which is expected to hit 30 per hour, Liu noted.

He said the Dongfeng passenger vehicles are playing a leading role in pulling the entire automotive supply chain back to production.

In Wuhan Economic & Technological Development Zone, there are more than 500 auto and car parts enterprises, including Dongfeng Honda, Dongfeng Peugeot Citroen, Dongfeng Renault and Dongfeng passenger vehicles.

As of March 23,729 companies have got work resumption approvals, and 247 of them have started production. Around 230 Dongfeng-related tier-one suppliers were approved and 202 of them resumed regular operation.

According to Yan Shicheng, director of Economy and Information Technology Bureau in Wuhan Economic & Technological Development Zone, authorities are taking various actions to help enterprises resume production and workers in other cities return to Wuhan.

Officials have offered chartered bus for picking up workers, and are also cooperating with communities to arrange accommodation.

As Hubei Daily report, the work resumption rate of tier-one suppliers for auto enterprises in Wuhan reached over 95 percent, and the supply chain shortage has been basically relieved.

"The virus outbreak had a huge impact on the auto market, but we have confidence to face up challenges and seize new opportunities," Liu Hong said. In the face of new conditions, the auto distributors are starting to explore new sales channels, including online shopping and livestreaming.