Coronavirus disruption halts production at Fiat's Serbia plant

Fiat Chrysler Automobiles (FCA) has halted operations at its Serbian facility due to a shortage of components from China following the imposition of trade restrictions as part of its battle against the spread of the coronavirus. It is the first automaker in Europe to have stopped production as a consequence of the coronavirus, though it is expected that others will follow suit as global supply chains continue to be disrupted.

“Due to the availability of certain components sourced in China we have rescheduled planned downtime at the Kragujevac plant in Serbia,” said FCA in a statement.

Fiat will halt the production of the Fiat 500L at its plant in Kragujevac due to the lack of audio-systems and other electronic parts imported from China, according to media reports. The company says it hopes to restart work later in February.

“We are in the process of securing future supply of those affected parts and production will be restarted later this month,” the company said.

It added that this halt will not affect the total production plan for the month.

FCA Srbija, a joint venture between Fiat Chrysler and the Serbian government, has been the largest exporter in the country ever since its new €10-billion facility in Kragujevac began production in August 2012. It became one of the most advanced FCA facilities in the world and produces the Fiat 500L model, which hit the global market at the end of 2012.

While FCA is the first to announce a suspension in European production, Hyundai has already halted production in South Korea, while Nissan closed one of its factories in Japan for two days, both because of a shortage of parts from China. Hubei province, at the centre of the coronavirus outbreak, is a major producer of auto components.

Earlier this month ING forecast the world's economy could suffer this year as a result of the knock-on effects of the coronavirus.

“The interruption of supply chains could have a snowball effect if stocks of essential electronic components from China are depleted,” said ING analysts. 

“And this isn't necessarily a temporary slowdown. The coronavirus could potentially impact the annual level of world trade in 2020, as it's not certain that factories and logistics will be able to catch up and fully compensate for earlier delays, given the limited capacity. If they cannot fully recuperate, global trade growth in 2020 will suffer.”

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