Coronavirus might shut European plant, Fiat Chrysler warns

Car maker sets up special team to source alternative supplies of critical components

Italian-US car manufacturer Fiat Chrysler is as little as a fortnight away from halting production at one of its European plants because of problems sourcing Chinese parts. Photograph: Stephanie Lecocq/EPA

Italian-US car manufacturer Fiat Chrysler is as little as a fortnight away from halting production at one of its European plants because of problems sourcing Chinese parts. Photograph: Stephanie Lecocq/EPA

 

Fiat Chrysler is as little as a fortnight away from halting production at one of its European plants because of problems sourcing Chinese parts, the company warned, in the first prospective European car plant shutdown resulting from the coronavirus outbreak.

Chief executive Mike Manley said four suppliers in China had been affected by the coronavirus outbreak, with one “critical” maker of parts putting European production at risk.

“We’ve got one high risk supply at the moment that we have identified,” he told FT.

Within two to four weeks the company will know “whether supply will be halted for one of our [European] plants,” he added.

The other three component makers “will also become critical” if the Chinese closures remain in force throughout February, he added.

A dedicated team within the carmaker has been directed to monitor the company’s parts and any potential production impact, including seeking alternative sourcing, something that takes time because new components have to be certified and registered, he added.

He was speaking after Fiat Chrysler posted record a 19 per cent drop in net profit to €2.7 billion, with a recovery in the final quarter following a weaker earlier part of the year. The group booked €1.6 billion of net income in the final three months, helped by record results in North America.

It comes after Hyundai shut its Korean facilities down because of a wire harness provider.

Earlier on Tuesday, Volvo Cars said it has switched battery supplier for its hybrid vehicles to keep production running. The Swedish carmaker has deals with China’s CATL and Korea’s LG Chem, and has switched to the Korean supplier following the outbreak.

“This is why we have this new joint partnership, exactly to mitigate possible disturbances,” chief executive Hakan Samuelsson told the FT.

Volvo’s profits slipped 2 per cent to 9.6 billion Swedish kroner because of cost savings during the year and a larger tax bill, while sales rose 8 per cent to SKr274 billion. – Copyright The Financial Times Limited 2020