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Detroit Three vehicle makers shut down US plants to combat Covid-19 outbreak

Detroit

THE Detroit Three carmakers will shut down their US plants to stop the spread of the novel coronavirus, bowing to pressure from the union representing about 150,000 hourly workers at those facilities, industry officials said.

Ford Motor Co, General Motors Co and Fiat Chrysler Automobiles (FCA) confirmed the decisions to shut their plants, as well as factories in Canada and Mexico.

The Detroit vehicle makers' shares took a beating on Wednesday, with GM closing 17.3 per cent lower, Ford off 10.2 per cent and Fiat Chrysler shares ending 9.2 per cent lower in New York.

The carmakers' North American factories build their most profitable trucks and sport-utility vehicles, such as Fiat Chrysler's Jeep Wrangler, GM's Chevrolet Silverado pickup and the Ford F-series truck line.

The actions come less than a day after the carmakers and the United Auto Workers union agreed to keep plants running with reduced shifts and staffing, and more time allowed for cleaning.

But that deal was put aside on Wednesday morning after Honda Motor Co said it would shut its North American factories for six days because of a slump in demand, and a worker at a Ford assembly plant in Michigan tested positive for the virus.

Ford on Wednesday morning closed the final assembly building at its complex in Michigan.

The firm said it would close all its North American plants after Thursday evening's shifts through March 30 to thoroughly clean the factories in the United States, Canada and Mexico. GM's timetable was the same, while FCA's is through the end of March.

Japanese carmaker Nissan Motor Co said it will halt production at US manufacturing facilities from March 20 through April 6 "to boost containment efforts where possible around the Covid-19 coronavirus".

South Korea's Hyundai Motor Co closed its Alabama assembly plant on Wednesday morning after an employee there tested positive for Covid-19.

Toyota Motor Corp said it would close its North American plants for two days next week.

The Detroit Three carmakers have yet to issue profit warnings, but Germany's BMW said on Wednesday that its 2020 profit would be "significantly lower" than last year. FCA said it would update its financial guidance when it has greater visibility on the epidemic's impact on the market.

The pain could also be felt by the US government, which would lose US$2 billion in tax revenue if sales in the entire US auto sector stopped for a week, said the Centre for Automotive Research in Michigan.

Meanwhile, other vehicle makers in North America are still operating assembly plants, including BMW in South Carolina; Kia Motors Corp in Georgia and Volkswagen AG in Tennessee.

Tesla Inc was operating its plant in California on Wednesday, despite a statement from local officials that the factory cannot continue to operate, as the San Francisco Bay Area began a three-week lockdown. Local officials said Tesla was preparing to reduce staffing by about three-quarters at the plant. REUTERS