Business

Shanghai production plunged in April after Covid lockdown

Although Shanghai began in mid-April to prioritize several hundred companies for resuming work, foreign business organizations have said that doesn’t mean the factories can operate at full capacity.

Tian Yuhao | China News Service | Getty Images

BEIJING — Auto production plunged in April as Covid lockdowns halted nearly all non-essential business in the metropolis of Shanghai, according to a report from the China Passenger Car Association.

Five major car companies in Shanghai saw production plunge by 75% in April compared to March, the association said in a report Tuesday. Production at major foreign automakers’ joint ventures in the northern city of Changchun — which also temporarily locked down to control Covid — dropped by 54% during that time, the report said.

Nationwide, China’s passenger car production also plunged in April, dropping by 41.1% year-on-year and by 46.8% compared to the previous month, the report said.

The auto sector in China accounts for about one-sixth of jobs and roughly 10% of retail sales, according to official figures for 2018 compiled by the Ministry of Commerce.

According to Citi, Shanghai is home to many auto producers: SAIC Motor, SAIC’s joint companies with Volkswagen and GMNioTesla and Ford.

Shanghai began locking down in earnest in late March.

Although the city began to prioritize several hundred companies for resuming work in mid-April, foreign business organizations have said that doesn’t mean the factories can operate at full capacity. Suppliers may also remain closed or unable to transport parts.

Tesla‘s Shanghai Gigafactory, which reopened with much fanfare about three weeks ago, remains subject to ongoing Covid uncertainty.

This week, the company had to reduce production in Shanghai due to Covid-related issues, according to JL Warren Capital CEO and Director of Research Junheng Li. A supplier had to close temporarily due to Covid, limiting the availability of parts for Tesla’s Model Y.

Tesla did not respond to a request for comment.

— CNBC’s Lora Kolodny contributed to this report.

Read more about electric vehicles from CNBC Pro

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