VW suspends Shanghai production amid COVID lockdown

SHANGHAI -- Volkswagen on Thursday said it would halt work at its factory in Shanghai between April 1-5, reversing an earlier plan to maintain some of its production, as the city extends a lockdown aimed at curbing the spread of COVID-19.

VW, which has a Shanghai joint venture with SAIC Motor, said it would carry out maintenance work in the factory.

VW earlier in the day said it would maintain some production over the period by providing accommodations and meals at its factory for employees volunteering to work.

Its Shanghai factory is in Anting district in the west of the city, which is scheduled to start a lockdown on Friday that will last until the early hours of April 5.

VW had asked staff at its Shanghai plant to prepare sleeping bags and yoga mats so the company could deploy a system that allows production to continue despite a strict COVID-19 lockdown, sources told Bloomberg on Wednesday.

The arrangement would haved enable the plant to run a so-called closed loop system while the west of the city is locked down for a mass testing blitz.

Workers were informed about the plan in a company message, according to the sources. They were also asked to bring two weeks’ worth of medicine for ailments such as colds and conditions like high blood pressure and diabetes, if required.

VW's China deliveries slumped 14 percent to 3.3 million vehicles last year, missing the company’s target partly due to lockdowns in Ningbo and Tianjin, where it also has manufacturing plants.

China's adherence to a COVID Zero policy is wreaking havoc on global automakers.

VW and Toyota suspended production at four plants in Changchun more than two weeks ago when the city 950 kilometers (590 miles) northeast of Beijing was plunged into lockdown to contain a COVID-19 outbreak.

That follows a near two-week shutdown of factories in Tianjin during an outbreak in January.  With Shanghai now in a phased lockdown, Tesla has suspended production at its gigafactory for at least four days, a blow to the electric-car pioneer given China is the company's second-largest market.

General Motors kept production running normally via a closed loop, a Shanghai-based spokeswoman said Tuesday. GM's plant is also run in conjunction with SAIC.

China deployed a large-scale version of the closed-loop system for the Winter Olympics in Beijing. It kept all athletes and support staff completely separate to the local population, preventing any virus transmission.

The government started allowing closed loops for some factories during a lockdown of the tech hub of Shenzhen earlier this month as a way of minimizing the economic hit.

China continues to adhere to a zero-tolerance approach to the virus, with effectively closed borders, mandatory quarantines and mass testing to root out cases key tools in their arsenal.

The COVID Zero strategy -- which Hong Kong says it also still maintains, despite thousands of infections -- is being increasingly challenged by more transmissible variants, especially as the rest of the world opens up.

Shanghai reported a record 5,982 new COVID cases on Wednesday, small by global standards but significant for a country that lived for long stretches infection free after eliminating the virus in its original epicenter Wuhan.

Some 71 million people in China are now in or facing lockdown, after the nation ramped up its defense against COVID in recent weeks.

Reuters and Bloomberg contributed to this report