Supply Chain Research

Auto supply chain operators – including vehicle assemblers and component manufacturers – are starting to announce disruptions from Chinese parts missing from the coronavirus outbreak. Fiat Chrysler has issued warnings about their EU production, the Financial Times reports, while Toyota and Honda have also seen similar issues. 

The just in time supply chains used by automotive firms are susceptible to event risk due to the low inventories the factories carry, as discussed in Panjiva research of Jan 28.

In North America Panjiva data retrieved via XpressfeedTM  shows how auto plants in Mexico may be affected. China accounted for 5.7% of auto parts imports to Mexico in the 2019. While a small amount at first glance the onward reliance of parts – a missing gasket can prevent engine assembly for example – means the loss of suppliers from China enough that a disruption could be problematic for auto manufacturers. 

This is complicated by the 4.6% year over year increase in imports from China over that same period, while imports from Canada and the U.S. fell by 7.3% year over year. This trend may start to reverse as new rules of origin requirements come into effect with the implementation of the U.S. Mexico Canada Agreement.

Chart segments imports to Mexico of auto parts (8708) on a quarterly basis.  Source: Panjiva

The large automakers may already be reducing their reliance on parts from China, potentially on a precautionary basis given the long-standing U.S. tariffs on Chinese imports. Imports associated with Fiat Chrysler and Daimler dropped by 37.0% and 64.4% year over year in Q4. There has also been an apparent overall weakening of activity – their imports from Canada and the U.S. also declined by 8.3% and 13.9% respectively.

General Motors meanwhile may be following a different strategy. Its imports from China fell by just 4.5% year over year in Q4 while its shipments from Canada and the U.S. fell by 10.5%.

Chart segments imports to Mexico associated with Chrysler, Daimler, and General Motors on a three month average basis, denominated in dollars.  Source: Panjiva

Recreating this analysis in S&P Global Market Intelligence Xpressfeed

Using the script available from S&P Global Market Intelligence’s Quantamental Research Xpressfeed code repository, first select the dimension fields that you want to query by, then add in values. Be sure to aggregate shipments when using the Mexico dataset, the default granularity is items. The query uses a normal union subquery, but filters for wanted HS codes inside the subquery.