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So far the industry says business as usual, but we think Singaporean car buyers could see delivery or parts delays in 2020 Now that the novel coronavirus (2019-NCOV) has hit the rest of the world, numerous carmakers have announced factory shutdowns both as a response to falling demand and as a preventative measure. As named in our Shutdown List (scroll down or click here), most of Europe is shutting down car production for the next two to three weeks at least.Some will only resume production in April or later, although with the entire NCOV situation everything is still touch and go. Pretty much every car factory has been shuttered from now til mid-April The summary: All of European car production has been shut down except for small-volume makers, North America is following suit, although its output is not as relevant to Singapore since very few US-made cars come here. The good news is that so far it seems to be business as usual for Japan, Thailand, and South Korea, meaning buyers or owners from mainstream brands may not be affected. That situation may obviously change, however. Currently Japanese carmakers are adjusting their output continuously. Toyota chairman Akio Toyoda quoted to Reuters: ” “At this point, we can’t foresee what’s ahead for automakers.” While South Korea seems to have its COVID situation under control, cases are still on the rise in Japan and in fact the country is reducing some of its measures. Cases are also still on the rise in Thailand with no widespread measures yet announced inside the country. CarBuyer has contacted most of the major brands and dealership groups in Singapore to ask them to comment on possible delays for customers – you can see those below. The summarised version is that dealers have enough stock on hand, while none of the major mainstream East Asian brands seem to be majorly affected yet. But from a professional perspective, we say that buyers of Continental vehicles can possibly expect to see delivery delays in future. As some companies have pointed out, there’s usually a buffer of existing stock to help meet demand. But if the long the shutdowns run of course, the stock dwindles and that’s when delays happen. Additionally, it’s not just new cars that will be affected, since some automotive suppliers are also shuttering their factories for the time being. That affects new cars – the situation in China in January already created production delays – and also the supply of spare parts too. With many dealers adopting split-team and more work-from-home initiatives, some may have leaner staffing situations now and service or delivery may take longer. CarBuyer has reached out to all the major car distributor/dealerships in Singapore asking for information on the situation Borneo Motors – Lexus, Suzuki, Toyota BMW Group Asia – BMW, Mini, Rolls-Royce Mr Christopher Wehner, Managing Director, BMW Group Asia. Will customers experience any delays in delivery? In preparation for the impact of COVID-19, BMW Asia increased stocks in order to meet customer demand. In Singapore, both Performance Motors Limited and Eurokars Habitat are in full operation with the necessary health and safety measures in place. We will do our best to continue delivering products to our customers in a timely manner with a premium experience. What about future orders? BMW AG has begun to shut down its European plants as well as Plant Rosslyn in South Africa. These will close by the end of the week, and the interruption of production for these plants is currently planned to run until April 19. At this time it is difficult to evaluate how future orders will be impacted. This will depend on demand in the coming months, as well as deliveries from our production plants in Europe. We are closely monitoring the situation, and will react quickly and flexibly. How long do you see this situation lasting? Any long-term effects on deliveries due to COVID-19, and the associated volatility of the financial markets, cannot be assessed at this time. BMW AG and our office in Singapore will continue to monitor the situation closely, and will keep our employees and partners updated regularly. The BMW Group knows how to manage difficult situations, and we have proven this many times in the past. Cycle & Carriage: Citroen, DS, Kia, Mercedes-Benz, Mitsubishi in Singapore Eurokars Group: MG, Mazda, Mini, McLaren, Porsche, Rolls-Royce Mr Shaun Domoney, Chief Operating Officer, Eurokars Group Nissan Asia Oceania Is there any delay on current Singapore customer deliveries? Are any plants in Japan and Thailand affected? In Japan, we are planning or have carried out temporary production adjustments at certain plants. There has been no impact on our other plants outside China, including Thailand. We continue to monitor the situation. Will the supply of parts be affected also? We do not have clarity yet on the impact of the new coronavirus. The wellbeing of our employees, our business partners and our communities is our highest priority. Volkswagen Group Singapore : Skoda, Volkswagen Mr Ricky Tay, Managing Director, Volkswagen Group Singapore VGS has sent out a letter to owners stating there could be possible delays due to working plans, rather than parts or production delays. Responses from Mr Ricky Tay, Managing Director, Volkswagen Group Singapore. Will customers experience any delays in delivery? Despite the shutdowns in Europe, we have assurance from our headquarters that business plans will be carried out wherever possible and that projects will continue as much as possible, to make sure there is minimal disruption in deliveries to our customers. In Singapore, VGS has implemented precautionary measures including work-from-home and split team arrangements to safeguard the wellbeing of our staff and that of our customers. Some of our frontline representatives and backend operations may not be at full capacity. Nonetheless, our teams are working hard and navigating all options to ensure we deliver our promise to customers as timely as possible. What about future orders? Currently, the Volkswagen brand has taken the necessary measure to suspend production at our European factories initially for an estimated ten business days only. As the COVID-19 situation is highly volatile, we will have to closely monitor the situation and manoeuvre through the uncertainties that lie ahead. In the meantime, we are making full use of our business continuity measures to ensure that deliveries of cars continue as planned. How long do you see this situation lasting? The coronavirus crisis is unprecedented and no one is able to gauge the extent of its impact or make a reliable forecast. But even as the epidemic continues to expand, the Volkswagen Group will continue to operate on the basis that the health and wellbeing of our entire community remains our top priority. The Shutdown List We’ve included factories that are known to build cars sold in Singapore, and have omitted North American unless relevant. BMW – has shutdown its Europe and South African factories until April 19, its US production, where it makes X series SUVs, is continuing production Mini is stopping production until April 17 at its UK plants, while Rolls-Royce is doing similar for four weeks until mid-April Honda – has stopped production at its UK factories, but there is no indication of its Japan or Thailand factories doing the same. Citroen /Peugeot/Opel – parent company PSA is closing its European factories until March 27 Ferrari – has stopped its production in Modena, being one of the first places in Italy to face the lockdown Fiat Chrysler – Fiat/Chrysler/Maserati has stopped production in Europe. Hyundai/Kia – The chaebol shut its factories in February due to NCOV but has since resumed production. Jaguar Land-Rover – has suspended production Mercedes-Benz – parent company Daimler has ceased most of its European production this week Nissan – Has stopped production at its UK Sunderland plant, which is where the Qashqai is made Renault – has shut its factories in France Toyota – has stopped European production Volkswagen Group – Audi, Bentley, Bugatti, Seat, Skoda, Volkswagen – announced on Tuesday March 17 that it would stop production in Europe for two to three weeks Volvo – has also ceased its European output from March 26 until April 14

China is doubling down on efforts to keep unprofitable factories afloat despite for years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy. The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down prices and crippled competitors, leading to thousands of lost jobs in the U.S. and elsewhere. China’s continuing aid for unneeded factories is triggering a sharp rise in trade disputes and protectionist sentiment, especially in the U.S., where trade has emerged as one of the pivotal issues in the U.S. presidential election. According to a Wall Street Journal analysis of Chinese public companies, Chinese government support includes billions of dollars in cash assistance, subsidized electricity and other benefits to companies. Recipients include steelmakers, coal miners, solar-panel manufacturers, and other producers of other goods including copper and chemicals. One beneficiary,Aluminum Corp. of China, or Chalco, said in October one of its units would shut down a roughly 500,000-ton-per-year smelter in the far-western Gansu region as it struggled to make profits. Executives prepped for thousands of layoffs. Then Gansu officials slashed the plant’s electricity bill by 30%, employees say, and the factory was saved. Although a portion of capacity was taken offline, most is operational. “We’re in full production now with 380,000 tons of capacity,” said Fei Zhongchang, a company sales manager. Chalco’s press office and local government officials didn’t respond to requests for further comment. In Europe, workers have joined protests against Chinese steel imports. Australia has investigated dumping of products including solar panels and steel and India has raised import taxes on steel after a surge of cheap Chinese goods. The U.S. launched seven new investigations into alleged dumping or government subsidies involving Chinese goods in the first three months of this year, more than the same period of any other year dating back to at least 2003, government data show. Earlier this year, the U.S. Commerce Department slapped preliminary import duties of 266% on imported Chinese cold-rolled steel. The decision came after U.S. Steel Corp. lost $1.5 billion last year, closed its last blast furnace in the South and laid off thousands of workers, blaming China. Late last month , U.S. Steel filed a trade complaint against China at the International Trade Commission, alleging price fixing, trans-shipment via third countries to avoid duties and cyber-espionage to loot technology off U.S. Steel computers. China’s Commerce Ministry has urged U.S. authorities to reject the complaint, and said allegations of intellectual property infringement “are completely without factual basis.” China says it isn’t guilty of dumping—or selling a product at a loss in order to gain market share—and calls U.S. and EU measures and investigations forms of protectionism. It says it has mothballed factories and intends to cut more, with plans to lay off up to 1.8 million steel and coal workers. Officials say it is natural for complaints against China to increase as the country takes on a large share of global trade. “As the largest trader in goods, it’s quite understandable for us to have so many” complaints, China’s Commerce Minister Gao Hucheng said recently. “We need to take it as it comes and live with it.” One way of tracking China’s support is by looking at subsidies reported in corporate filings on the country’s two main stock exchanges in Shanghai and Shenzhen. According to a Journal analysis of nearly 3,000 domestic-listed Chinese companies in 2015, reported government aid rose to more than 119 billion yuan, or more than $18 billion, last year compared with about 92 billion yuan in 2014. Reported subsidies have risen roughly 50% since 2013, based on figures from Shanghai data provider Wind Information Co. Under Chinese accounting standards, such aid can be cash or other perks like subsidized power or land, but doesn’t include some other support, such as capital injections from the government as an equity shareholder. Recipients include an ethanol producer that said it was promised as much as 40 million yuan ($6.1 million) in subsidies in the first three months this year because of “grave operating circumstances.” A producer of titanium dioxide—which is used in products such as paint and sunscreen—won about 28 million yuan ($4.3 million) in cash assistance as it seeks to expand in the North America and elsewhere. Another company, Yunnan Aluminium Co., obtained nearly 500 million yuan ($77 million) in subsidies since late 2015, securities filings show. In the first half of 2015, the company says its production of alumina—the starting material for smelting aluminum metal—jumped 40%, even as revenue sank amid weakening prices. Company representatives didn’t respond to requests for comment. An official at the provincial Department of Finance, which administered much of the cash aid, said it acted to protect Yunnan Aluminium’s 10,000 jobs. “The government’s aim is to help maintain social stability,” the official said. Other countries, including the U.S., offer substantial support for struggling industries. Experts cite differences in China, which they say is less open about its use of subsidies and more inclined to use them to promote exports. China has repeatedly said it would shutter unneeded factories, without following through. The need for capacity cuts in China has long been apparent. More than 40% of its major steel companies were losing money in the first half of 2015, according to the China Iron and Steel Association. China’s Ministry of Industry and Information Technology, which oversees the steel industry, told the Journal in 2014 that authorities were already “in the process of implementing” capacity reductions. Since then, Chinese crude steel production has fallen 2% year-on-year in 2015 to about 804 million metric tons. But industry experts in China, the U.S. and Europe say a further 200 million metric tons of capacity—or about 25% of China’s production—needs to be cut to restore market balance. China’s steel exports jumped around 20% last year to 112 million metric tons, according to customs data. A 63-page “investigation initiation checklist,” filed last year by U.S. Steel Corp., Nucor Corp. and the United Steelworkers union to demand import tariffs on rolled steel, found 44 separate subsidy programs, including seven that give Chinese steelmakers cheap or free land, iron ore, coal, and power; eight that offer discount loans; 15 tax breaks; and 11 programs that give companies money directly. Some of the programs date back years, but others were active in the past 12 months, including subsidized export loans, the document showed. “It’s the whole range of practices that keep these zombie companies alive,” said Roger Schagrin, a lawyer for U.S. steelmakers. At the time, a spokesman for China’s Commerce Ministry said restrictions on Chinese steel would not solve the global overcapacity problem, and encouraged Chinese steel companies to defend their rights. Other Chinese products rattling markets include diesel fuel, with Chinese exports rising nearly 80% in 2015 over 2014, according to customs data. China has loosened restrictions to let private refiners export fuel for the first time, given weak domestic demand. While U.S. energy companies shed staff, China’s by and large haven’t. Refining giant China Petroleum & Chemical Corp., whose net profit fell by 30% in 2015, told the Journal no employees have been laid off since late 2014 when oil prices began to fall, and that it had “no plan for any future layoffs.” The company, also known as Sinopec, employs about 351,000 people. China’s aluminum production, meanwhile, rose to 32 million tons in 2015, double the level in 2005. Exports soared to 6.7 million tons from 2.6 million during the same period, helping push global prices down 40% in the past five years. The number of smelters in the U.S. has fallen to four from 23 in 2000, destroying thousands of jobs. Tensions over lost jobs reflect wider frustrations that China hasn’t lived up to all the promises it made when it joined the World Trade Organization in 2001. According to data collected by the WTO, China accounted for around 25% of all anti-dumping measures reported between 1995 and 2014, more than any other nation. The U.S. was the target in about 5% of measures, the data show.