VW Is Latest Automaker Ensnared by Chinese Covid Plant Shutdowns
(Bloomberg) -- More global automakers have been caught in China’s latest coronavirus outbreak in Tianjin, adding further stress to already strained supply chains.
A production plant operated by Volkswagen AG’s joint-venture with FAW Group has been shuttered since Monday, along with a gearbox supplier controlled by the German automaker, according to an emailed statement Friday. They join a Toyota Motor Corp. factory with a yearly output of half a million cars that has been closed for five days.
Halting the VW plant may hit production of the Audi Q3 and several versions of the VW Tayron compact sport-utility vehicle, the company said. Volkswagen, which employs around 8,000 people in Tianjin, expects to resume output “very soon” and catch up with lost production.
The omicron outbreak in China is nevertheless sending jitters through supply chains, as the nation’s production and shipping face disruptions from strict measures to contain the highly transmissible omicron variant. Tianjin, a port city of 14 million, is a key production hub for foreign businesses and home to not just the VW and Toyota facilities but also an Airbus SE final-assembly plant.
Despite the difficulty every country faces in containing omicron, China is persisting with attempts to keep the virus out as part of its zero-Covid policy. Still, that’s proving harder after the variant spread in three cities since the start of the year.
Omicron has the potential to “significantly change the picture” in China, Airbus Chief Executive Officer Guillaume Faury warned this week, though he said the plane maker hadn’t seen any disruptions so far. China is the destination for one in every four of its aircraft deliveries.
Airbus, based in Toulouse, France, is doing everything it can to minimize potential disruption, a spokesman said Thursday. VW said it has tested all employees twice this week, adding that the “top priority remains the health and well-being of our employees.”
The Toyota plant produces around 500,000 vehicles a year, including popular models such as the Corolla sedan and Rav4 SUV.
Tianjin is just 30 minutes from Beijing by train and adjacent to Hebei province, which is hosting most of the snow sports during next month’s Winter Olympics. City authorities have mandated mass testing to attempt to stamp out an outbreak of the virus. Tianjin’s port, the ninth biggest container port in the world, has been operating normally, according to state news agency Xinhua.
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