Companies begin production in key manufacturing hub of Hubei

Carmakers and auto suppliers in Wuhan, capital of Hubei province, are resuming operations gradually after a hiatus of nearly 50 days, as the novel coronavirus outbreak appears to be receding in the city hit hardest by the epidemic.

Dongfeng Honda, a joint venture of Dongfeng Motor Corp, commenced production in Wuhan on Wednesday, two days after it got the written approval from local authorities. Dongfeng's Chinese-branded passenger vehicle subsidiary is scheduled to resume production on Thursday.

Wuhan-based Dongfeng is the country's third-largest automobile group by sales, and has over 160,000 employees. It has partnerships with international companies like Honda, Nissan, PSA and Renault.

"Dongfeng Honda has a large sales volume, so it is one of the first within the group to resume production," said a Dongfeng staff member with knowledge of the matter.

Established in 2003, the joint venture has three plants in Wuhan, with a combined annual production capacity of over 600,000 vehicles, and employs over 12,000 people.

The Dongfeng employee told China Daily that Dongfeng Honda has not resumed full-scale operation because people in Wuhan need to get a health code from local authorities to travel within the city.

Other joint ventures are expected to follow suit soon. A representative at Wuhan-based Dongfeng Renault said the company is scheduled to resume operations on Monday. Another Sino-French joint venture, Dongfeng Peugoet Citroen, said it is actively engaged in preparations for production, although it has not decided on the date.

Hubei province, especially Wuhan, is one of the most important automotive manufacturing regions in China.

According to the National Bureau of Statistics, carmakers in the province produced 2.24 million vehicles in 2019, accounting for 8.8 percent of the country's total.

Besides Dongfeng and its joint ventures, US carmaker General Motors as well as auto suppliers including Valeo, Webasto and Bosch have manufacturing facilities in the province.

GM's joint venture SAIC-GM said its Wuhan plant has got the necessary approvals from the local authorities to resume production.

A representative at French auto parts supplier Valeo said its two plants in Wuhan have received the approval as well, and will restart production within this week. Valeo also has two plants in Jingzhou, also in Hubei province, and they have been in production for a while.

German auto parts producer Webasto said it has filed applications to restart production at its two Hubei plants－one in Wuhan and another in Xiangyang, and is expected to receive official replies later this week.

Carmakers and auto suppliers in regions outside of Hubei province have been in production for a while, with most of their plants having opened in February.

The novel coronavirus outbreak has affected China's automotive industry that had witnessed falling sales for two years in 2018 and 2019.

Statistics from the China Passenger Car Association show that carmakers in the country produced 215,000 vehicles in February, down 80.6 percent from the same month last year. Passenger vehicle sales during the month slumped 78.5 percent year-on-year to 252,000 units. During the first two months, vehicle sales totaled 1.97 million units, down 41 percent from the same period a year ago.

"Obviously, the coronavirus outbreak had a much larger effect on the industry than the Spring Festival holiday," said Cui Dongshu, secretary-general of association.

He expected sales will slowly rebound in March and April before reaching the normal level in May, if the epidemic can be effectively curbed by April.

The CPCA estimated that passenger vehicle sales will fall by 8 percent this year on a yearly basis. It had expected the sales in 2020 to grow 1 percent year-on-year before the coronavirus outbreak.

International carmakers, however, are confident in the long-term potential of the Chinese market.

GM China President Matt Tsien said the outbreak has caused some delay in the carmaker's projects in China, but he added that it will not affect the company's confidence and investment in the country, its largest market globally.