Automakers rush to secure supply lines

• Identifying a potential parts shortage, General Motors (NYSE:GM) has airlifted supplies for its North American truck production, according to United Auto Workers officials.
• Fiat Chrysler (NYSE:FCAU) has also said it's seeking alternative suppliers, while Toyota (NYSE:TM) and auto suppliers Dana (NYSE:DAN) and Aptiv (NYSE:APTV) have established teams, task forces and war rooms to monitor the COVID-19 outbreak.
• Earlier this week, Moody’s Investor Service cut its global vehicle sales forecast to be down 2.5% in 2020 instead of a decline of 0.9%.

Comments

[MrAwesometown]

I'm more concerned with the supply of medicines coming from China than auto parts.

[Mike Smitka]

I've submitted an article to SA, attempting to assess the financial impact to date. As other comments note, inventories at the dealership level present a buffer, while parts shortages may be random and only affect specific models for brief periods of time. We really won't know for another 10 days, as it can take 6 weeks for parts produced after the end of the Chinese New Year to arrive. Or not.

Note that after 3/11 (the March 11, 2011 Tohoku quake/tsunami) OEMs worked hard to develop visibility across their supply chains to not only Tier II's and Tier III's but the materials suppliers upon whom they were dependent. As a result they worked to develop second sources where potential bottlenecks were identified, and stockpile where that was impractical.

All bets are off if Europe and Japan and Korea stop producing alongside China. Or rather, it will be only a matter of time before we face widespread production shutdowns in North America.

To return to dealership inventories: if sales are falling, only lengthy shutdowns really matter. Supply will need to adjust downward, this will make that a sooner rather than a later.

[tomatojuice]

So it’s a good time to buy a car if no one else is buying?

[1970Hoosier]

The Toyota plant here in KY is shut down for 10 days. We build heavy stamping dies and precision forgings in my shop and we've had a large amount of work lately. Our customers are still ordering.

[Tdot]

This is becoming common with all automakers and their suppliers. Shutting down until April, as part of Trump's 15-days to Stop the Spread initiative.

[cssys]

us auto sales were already slowing. plenty of inventory of new and used cars. low interest rates and deep sub prime lending have had a huge impact on car sales for at least the last 5 years. the auto bubble will end as the housing crisis did with record losses for banks and stock holders.......

[OverTheHorizon]

Afraid you’re right. The parts shortage is self-correcting—fewer needed as new car market slows dramatically.

[PEAK AUTOS]

Could this actually benefit F if Asia plants are closed for parts shortages?

[Kris Anderson1441]

Ford don't care

[Ron Burgundy’s Hair]

$Failure will first conduct a lengthy and extensive analysis before concluding they have a logistics issue by which time the virus concerns will be resolved.