Car audio companies are now predicting that the Coronavirus could cause shipping delays of 3 to 4 months, leading to product shortages.
Some car audio factories in China are still working at 15 to 30 percent capacity, said suppliers, who are beginning to anticipate shortages on popular products in the coming months.
This situation is the same across many product categories, to the point that Best Buy last week said it expected nearly flat sales for the coming year. And although it predicted most of the impact would be in the first half, the chain would not be able to fully make up those sales later in the year.
Goldman Sachs is now predicting zero growth for US companies due to the virus. The consensus prior to the virus outbreak on Wall Street had been 7 percent growth in the US.
Goldman sent a note to clients last week saying,“Our reduced profit forecasts reflect the severe decline in Chinese economic activity in Q1, lower end-demand for US exporters, disruption to the supply chain for many US firms, a slowdown in US economic activity, and elevated business uncertainty.”
Apple had announced in February that it would not meet its previous forecasts for Q2 due to the virus. And Microsoft said last week it will not meet its forecasts for its upcoming quarter due, again, to the outbreak.
PowerBass said delays for the industry could run 3 to 4 months. LinksWell is expecting delays of close to 90 days. American Bass said delays could run 2 months or longer.
Although LinksWell’s factory is far south of Wuhan, the epicenter of the outbreak, some employees are from the affected area and are still making their way back from visiting home and quarantine during the Chinese New Year in January. “That’s the key, the workers live all over China…It takes some a week or a week and a half to get home. They go home two or three times a year. It’s a different lifestyle.”
DS18, which has ownership in two factories in China, said companies that didn’t place their orders by December won’t have product until June or July. “They will need to wait two months to get the parts, then a month to build and then time to send. For those who didn’t order it’s a very bad situation,” said DS18 CEO Alberto Susterman. He added, “It’s hard to find shipping containers now, and generally you have to wait for an inspector to come to the factory. Who knows when the inspectors will be available to check.”
Shipping from China is a problem. There are fewer dock workers at the ports and the airplanes are full. There are less flights leaving China, said Alex Camara, CEO of AudioControl.
Alpine Electronics said, “While we expect some delay on Alpine products built in China, it is unclear at this time what the exact timeline will be. However, Alpine is working hard to minimize the delay as much as possible.”
“We may run out of some products,” said Bob Ahuja, CEO of American Bass. “I think this is going to be industry-wide. I think our shipments will be delayed at least a couple of months, maybe more. In the next week to 10 days, we’ll figure it out.”
Many companies have had 18 months to two years to move their manufacturing out of mainland China. Those that have will not be affected as those that did not. Maybe this will be the final impetus to move manufacturing of electronics out of China as the sole source of production