General Motors (GM), Nissan (NSANF), Renault (RNLSY), Honda (HMC) and Peugeot owner PSA Group (PUGOY) are among several companies that have large manufacturing plants in Wuhan ground zero of the coronavirus outbreak that has already claimed dozens of lives.
All of the Western automakers operate the plants through joint ventures with Chinese automakers, including GM's partner SAIC and Dongfeng Motor Corporation, one of the country's largest auto groups. The GM-SAIC plant in Wuhan has about 6,000 employees, about 10% of GM's total work force in China.
At least 10 cities and almost 30 million people in China's central Hubei district are facing travel restrictions. Beijing and Shanghai are at the highest level of alert for a public health emergency.
Virus-related shutdowns are expected to hit spending over the upcoming Lunar New Year holiday, when consumers typically spend more on travel, entertainment and gifts, ratings agency S&P Global said Thursday. If spending on services such as transport and entertainment fell by 10%, China's overall economic growth would contract by about 1.2 percentage points, it added.
French carmaker Renault sold nearly 180,000 vehicles in China last year, or about 5% of its global car sales. It manufactures its flagship SUVs the Kadjar and Koleos 2 models at the Wuhan plant.
In 2018, Renault produced 16,459 Kadjars and 31,299 Koleos in Wuhan to cater to the needs of the Chinese market, spokesperson Ri Yamane told CNN Business. Sales figures for 2019 will be available in March, she added.
According to Renault's website, the Wuhan factory has a workforce of 2,000 and annual capacity of 300,000 vehicles.
PSA Group sells its Peugeot and Citron brands in China. Last year, the company sold about 117,000 vehicles in the country, a 55% decline on the previous year. A company spokesperson did not respond to a request for comment on the size of its operations in Wuhan, but said that the firm is "applying the recommendation of Chinese authorities."
Honda's Wuhan joint venture contributed about 11% to the group's revenue for the year to March 2019 and accounted for the majority of its Asian automobile revenue, financial statements show. The company opened a third plant in Wuhan in April, according to a press release.
Given the upcoming Lunar New Year, companies may not feel the effect of the lockdown for a while.
Renault and Honda said their Wuhan plants were already closed for the holidays. A spokesperson for Honda said its plant was closed from Thursday until February 2.
"We are studying carefully the issue internally through the different departments and China," Renault's Yamane said. "We are of course respecting the Chinese authorities' regulations," she added.
GM says it is staying abreast of the development and advising employees who are not feeling well to not come to work.
"The most important thing is to contain the virus - production is secondary to the health of the team and community," said GM spokesman Jim Cain.
Shares in luxury goods companies, which usually benefit from increased consumer spending over the Chinese New Year, have also taken a hit this week, although they recovered a little on Friday.
These companies are "bracing themselves for a potential hit to their sales," said David Perrotta, the UK head of international payments provider, Planet.
Travel restrictions could have a "significant impact on sales during this crucial two-week spending period" when "luxury retailers would typically be expecting a windfall in sales to Chinese shoppers," he added.
In 2018, Chinese consumers at home and abroad spent 770 billion yuan ($115 billion) on luxury items, equivalent to a third of the global spend, according to McKinsey. The management consulting firm expects Chinese consumers to account for 40% of the world's spending on luxury goods by 2025.
Kering and Richemont declined to comment. LVMH did not respond to a request for comment.
Charles Riley, James Griffiths and Steve George Kate Trafecante, Vanessa Yurkevich and Chris Isidore contributed reporting.