Wuhan-based Dongfeng Motor’s profits to take a hit as carmaker delays resuming production at all its plants
- China’s second-largest carmaker has most of its production capacity in Hubei province, epicentre of the outbreak
- Epidemic another blow to China’s car industry reeling from two years of declining sales
Dongfeng Motor, China’s second-largest carmaker based in Wuhan, will post lower profits as a result of the extended production break arising from the deadly coronavirus outbreak, analysts say.
Dongfeng Passenger Vehicle, a Hubei-based subsidiary – the epicentre of the Covid-19 outbreak – is planning to return to production on February 23, while Dongfeng Commercial Vehicle, another arm, will resume production on February 21, according to Chinese media.
Dongfeng’s Ebitda margin, a key profitability ratio, could decline to 8 per cent in 2020 from an earlier forecast of 9 to 10 per cent if production is suspended for another one to two months, rating agency S&P Global said on Monday.
“By our estimate, [Dongfeng Motor] will see annual production loss of at least 4 to 5 per cent based on the current production suspension schedule,” S&P Global analysts led by Stephen Chan wrote in the report.
The global death toll from the epidemic rose to 1,775 on Monday, with more than 71,000 confirmed cases of infection. Nearly 1,700 of the deaths were in Hubei, the central Chinese province where the virus originated.