China’s Zero COVID Policy Threatens Global Auto Production
China’s Covid-Zero policy could cause global vehicle production to lose 2% of growth in 2022, equivalent to about 1.5 million units.

Creative Commons
COVID-19 outbreaks are leading to lockdowns in China’s largest cities presenting new challenges to automakers.
Toyota Motor Corp. and Volkswagen AG shuttered production at four plants in Changchun over two weeks ago when the city 590 miles northeast of Beijing plunged into lockdown to contain a Covid-19 outbreak. The companies report its unclear when workers will be able to return.
The shutdown follows after a COVID outbreak in January halted production for nearly two-weeks in Tianjin factories.
COVID threats escalated this week when China put Shanghai in a phased lockdown to combat a surge in infections. The move forced Tesla to suspend production at its Gigafactory for at least four days. Hino Motors Ltd., Toyota’s bus and truck unit also paused production in Shanghai because of the outbreak.
China serves as a manufacturing powerhouse for automotive supply chains. The country churns out around 25 million cars a year and countless parts. China’s Covid-Zero policy could cause global vehicle production to lose 2% of growth in 2022, equivalent to about 1.5 million units, according to Joshua Cobb, a senior autos analyst at Fitch Solutions. Combined with other supply issues, it will push the industry’s production recovery into 2023
The disruptions compound the issues caused by Russia’s invasion of Ukraine, which pushed up commodity prices, and the ongoing shortage of semiconductors.
Bloomberg estimates lockdowns affect an estimated 71 million people. These shutdowns have a “direct impact on the number of cars we can deliver to customers,” Brian Gu, the president of EV upstart Xpeng Inc. noted in a Bloomberg Television interview.
Bloomberg Intelligence reports: “Mushrooming Covid-19 outbreaks may steer China’s passenger-vehicle sales decline toward the pessimistic end of our 0-8% scenario for the first quarter. Recent lockdowns in Shenzhen, Shanghai, Changchun and other cities have kept buyers away from showrooms and disrupted vehicle production as automakers and suppliers scale back factory output.”
Some observers predict China will loosen its rigid anti-Covid measures. President Xi Jinping called for the economic and social fallout from the nation’s virus elimination strategy to be limited. Though large-scale lockdowns and mass testing continues, authorities are making concessions to avoid severe manufacturing disruptions.
General Motors has maintained production at its joint venture in Shanghai by having its employees work, live and sleep in isolation facilities, Reuters reported.
More Dealer Ops

Ladies and Gentlemen, This Is a Dealership: Why the Fundamentals Still Decide Who Wins
A teaching moment by a legendary football coach happens to apply perfectly in the auto retail space. Learn what it is and how to use it to your store’s advantage.
Read More →
Timing the Market Can Hurt Long-Term Program Performance
For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.
Read More →
Dealer Ads and the FTC
The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.
Read More →
Used Autos Supply Dwindles
The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.
Read More →
Managing Risk Effectively Through Changing Times
The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.
Read More →
Survey Reveals What Won't Fix What's Breaking Car Sales
AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.
Read More →
IA American Appoints Two Execs
Senior vice presidents of the company's agent and dealer channels chosen to support general agents and help auto dealers with sales and performance.
Read More →
Cox Automotive Acquires Inspection Firm
Full ownership of Alliance Inspection Management, or AiM, meant to unlock growth for Manheim inspection capabilities
Read More →
Assurant Expands Partnership With Holman
Extended collaboration delivers training, products and performance development to 30 newly acquired Holman dealerships
Read More →
Franchises, Throughput Down in First Half
A handful of states see franchise growth through June, while EV sales per store boost overall business in U.S.
Read More →