Volvo halts output at Chengdu factory after COVID lockdown

Volvo will temporarily close a plant in the Chinese city of Chengdu due to local coronavirus restrictions, a company spokesman said.

“Due to the lockdown in Chengdu, Volvo Cars is temporarily suspending production at a manufacturing plant there. We are assessing the impact on the business and we will continue to monitor the situation,” he said.

The plant builds the S60L sedan and XC60 crossover.

Earlier on Thursday, Chengdu announced a lockdown of 21.2 million residents, the most populous city to be shuttered since Shanghai earlier this year.

Volvo’s plant in Daqing had also been affected by a lockdown in recent days, the company spokesman added.

Volvo, majority owned by Chinese automotive company Geely Holding, has produced vehicles in China since 2013 and last year sold almost 172,000 vehicles in the country, some 25 percent of its overall sales.

Other major Chinese cities including Shenzhen in the south and Dalian in the northeast have also stepped up COVID restrictions this week, ranging from work-from-home requirements to the closure of entertainment businesses in some districts.

The moves curtail the activities of tens of millions of people, intensifying the challenges for China to minimize the economic impact of a “dynamic-zero” COVID policy that has kept China’s borders mostly shut to international visitors and make it an outlier as other countries try to live with the coronavirus.

Most of the curbs are intended to last a few days for now, although two provincial cities in northern China have extended curbs slightly beyond initial promises.

Chengdu’s lockdown sparked panic buying of essentials among residents.

“I am waiting in a very long queue to get in the grocery near my home,” 28-year-old engineer Kya Zhang said, adding that she was worried about access to fresh food if the lockdown is extended.

Hwabao Trust economist Nie Wen said that because Chengdu acted quickly to lock down, it was unlikely to see a repeat of Shanghai’s two-month ordeal.

Non-essential employees in Chengdu were asked to work from home and residents were urged not to leave the city unless needed. Residents who must leave their residential compounds for hospital visits or other special needs must obtain approval from neighbourhood staffers.

Major industries engaged in important manufacturing and able to manage on closed campuses were exempted from work-from-home requirements.

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