In keeping with VW, there could also be disruptions in China's car manufacturing as a consequence of chip shortages

© Reuters. FILE PHOTO: A Volkswagen Electric ID car is seen during a completion event of the SAIC Volkswagen MEB electric vehicle plant in Shanghai

By Yilei Sun and Brenda Goh

BEIJING (Reuters) – Volkswagen AG (OTC :), the largest overseas automaker in China, said on Friday that China's entire automobile production could be halted after the COVID-19 pandemic cut chip supplies for some electronic components around the world.

The pandemic has hit auto and auto parts production worldwide, and auto manufacturing in China, the world's largest auto market, relies heavily on imported chips for electronic parts such as electronic control units and electronic stability programs.

"The chip supply for certain electronic vehicle components was affected due to the uncertainties caused by the pandemic," a representative from Volkswagen (DE 🙂 told Reuters in an email.

"This has resulted in a possible stoppage of automobile production, with the situation becoming more critical as demand has increased due to the full recovery of the Chinese market," the statement said, referring to China's entire automobile production, not Volkswagen's specifically relates.

Volkswagen also said it is closely monitoring the situation and has already begun to coordinate with its headquarters and suppliers to take appropriate countermeasures.

The Wolfsburg-based company has local joint ventures with SAIC Motor Corp., China FAW Group Corp. and Anhui Jianghuai Automobile Group Corp. (JAC).

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