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Fiat Chrysler may shut European factory over coronavirus

Edmund Heaphy
Finance and news reporter
A worker at a Fiat factory near Naples in southern Italy. Fiat Chrysler said supply chain issues related to coronavirus could force factory closures. Photo: Salvatore Laporta/Kontrolab/LightRocket via Getty Images

Fiat Chrysler (FCAU) may be forced to halt production at one of its European factories due to coronavirus-related supply chain issues, the car company’s CEO said on Thursday.

Mike Manley warned that four of its Chinese suppliers had been affected by shutdowns, and that one of them was a “critical” provider of parts.

“We’ve got one high-risk supply at the moment that we have identified,” Manley told the Financial Times.

Manley said that the company would know whether it would have to shut one of its plants within four weeks.

The fast-spreading coronavirus has killed more than 560 people in mainland China. More than 28,000 people have been infected, and many businesses across the country have shut amid the panic.

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Fiat Chrysler on Thursday reported that before-tax profits in its fourth quarter rose by 7% to €2.12bn (£1.8bn, $2.3bn), in line with expectations.

The carmaker said that revenues were boosted by strong performances in North America and Latin America.

Its financial results come ahead of its $50bn merger with Peugeot-owner PSA (UG.PA), which is expected to be completed in early 2021.

But Fiat Chrysler is not the only carmaker to experience coronavirus-related issues.

Hyundai shut down its operations in South Korea due to issues with the provider of a wire harness component.

“The decision is due to disruptions in the supply of parts resulting from the coronavirus outbreak in China,” Hyundai said on Tuesday.

Volvo was forced to switch battery suppliers in order to keep production running smoothly.

Meanwhile, many automakers have shut down plants in China, including Tesla, Ford, and Nissan.

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Others, such as Volkswagen and Mercedes-Benz-owner Daimler, said that they would reopen their Chinese plants next week if they received the necessary government authorisation.

China is a hugely significant market for many German carmakers, and is Volkswagen’s biggest market.

Chinese auto dealers on Wednesday sought financial assistance from banks, warning that they could face “extreme liquidity pressure” due to a “cliff-like decline” in sales.

The request was made by China's Automobile Dealers Association in a 5 February letter to China's Banking and Insurance Regulatory Commission.

Supply chain issues have not yet affected car production in the US, even though most vehicles made in the country use some Chinese parts.