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February 28, 2020

As the coronavirus cripples China’s auto market, US market prepares for supply chain problems

"The coronavirus outbreak already has crippled China’s auto market, the world’s largest by sales, after several factories were idled for weeks from a government-ordered business shutdown in an effort to contain the outbreak," the article reports.

As automotive suppliers flag risk of shortages, LLamasoft CEO Razat Gaurav talked with Wall Street Journal about the future of the automotive supply chain.

The article continues, "Auto parts made in China generally take several weeks to be shipped via ocean freight to the U.S., a lead time that has so far delayed any impact on U.S. vehicle production, said Razat Gaurav, chief executive of LLamasoft, an Ann Arbor, Mich.-based supply-chain analytics firm.

However, with some critical components already in short supply, several car companies and auto-parts suppliers have chartered airplanes or booked space on commercial cargo planes to fly parts directly from China, Mr. Gaurav said."

Companies are "trying to boost production at other Asian plants and is outsourcing some production". Gaurav predicts early shortages include electronics that contain semiconductor chips and mechanic parts such as brake pads or door hinges due to limited supply.

“That finished vehicle doesn’t get off the shop floor until each of those component parts are in place,” Gaurav said. “It’s all or nothing.”

Tensions increase as companies discuss who will cover the additional expenses.

Read the full article here.
Original Source