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Shanghai lockdowns could force China carmakers to stop production

BEIJING (AFP) – Chinese auto makers may have to put the brakes on production if strict Covid-19 curbs in Shanghai persist, said the founder of electric carmaker XPeng, as a prolonged lockdown of the economic hub menaces supply chains.

The lockdown has kept Shanghai’s 25 million residents mostly at home, forcing manufacturers to halt operations, and has made China’s GDP growth target of around 5.5 per cent look increasingly difficult to achieve.

Covid outbreaks across the country and the associated reductions in economic activity have already hit the auto industry hard, with car sales dropping 10.5 per cent in March.

“If supply chain companies in Shanghai and its surrounding areas cannot find a way to dynamically resume work and production, all original equipment manufacturers may have to stop production in May,” XPeng chief He Xiaopeng said on Thursday on social media.

XPeng has been touted as a Chinese challenger to United States (US) electric car giant Tesla, and its chief said that businesses were hoping for more support from the authorities to navigate the Covid closures.

The XPeng P7 rolls off the production line. PHOTO: AP

Volkswagen also said it has been “severely hit by Covid-19 outbreaks in Changchun and Shanghai”, where the German titan’s Chinese joint ventures are located.

The firm is “temporarily unable to meet high customer demand”, said Volkswagen Group China CEO Stephan Wollenstein on Thursday, adding that he hoped the production delays could be made up in the coming months.

China’s zero-Covid policy has been increasingly strained as the country battles its highest number of infections since the start of the pandemic.

Volkswagen said around 20 per cent of its dealers were forced to temporarily close in March alone as a result of lockdowns.

Tesla’s multi-billion-dollar “gigafactory” in Shanghai – which the company calls its main export hub – has also been reportedly shut.

Chinese electric vehicle maker Nio said last weekend that it had suspended vehicle production, as business partners in virus-hit areas such as Jilin and Shanghai halted operations.