Coronovirus Causing Major Headaches for Jaguar Land Rover
The coronovirus is threatening Jaguar Land Rover’s ability to reliably get parts from their Chinese suppliers.
Though it’s still short of a full-blown pandemic, the coronavirus outbreak has already taken a heavy toll in human suffering. Now the onslaught of the unpredictable virus is having a chain reaction effect on the global automotive industry. This comes on the heels of the tariffs that have been imposed on Chinese auto parts. China alone exports more than $70 billion in car parts and accessories as part of the $400 billion global auto parts industry. The already hard-hit Chinese auto parts industry is taking another one to the chin from the effects of the coronavirus. The effects are predictably spreading to the car manufacturers that rely heavily on those auto parts to build their vehicles.
According to reporting by CNN, Jaguar Land Rover is now being forced to fly auto parts from China to its factories in Europe. Normally Jaguar Land Rover relies on cargo ships to get their parts. The cargo ships are slow-moving but reliable. For now, the change in the method used to deliver the parts from ships to airplanes is keeping the factories in production. “Parts that are normally six weeks on the ship, we can fly [them] and it’s more expensive, but at least we can carry on with the production,” Jaguar Land Rover’s CEO Ralf Speth told CNN First Move’s Julia Chatterley. Jaguar Land Rover is owned by the Tata company of India. Like a lot of car manufacturers, they rely heavily on Chinese-made auto parts.
The problem is that there is no way of knowing if all of Jaguar Land Rover’s Chinese suppliers will be able to deliver parts at all. And if that happens, factory production could conceivably grind to a halt. A lot of Chinese factories have been forced to close while the country deals with the fallout from the virus. “It … depends whether the supply chain in China and the production in China is in swing again,” said Speth.
Jaguar Land Rover has a total of three vehicle factories and an engine plant located in the United Kingdom as well as one vehicle plant in mainland Europe. It currently employs 35,000 people, with another 40,000 employees worldwide.
Speth notes that they might able to keep its plants operating without Chinese parts if they are not “critical” to the assembly process. Things aren’t looking good, though. In two weeks the factories will run out of 17 different parts needed to build various vehicles. Speth sold CNN that running out of parts would in effect shut the plants down. He also adds that another problem compounding the situation is the fact that there are virtually no cars sales happening in China right now. And that’s not good when you take into account the fact that China is, or was, the largest market in the world for car sales.
Photos: Jaguar, Land Rover