Volkswagen Group is the vehicle manufacturer most exposed to the coronavirus outbreak in China, according to a report by ratings agency S&P.

In a report “The Coronavirus Dashes Recovery Hopes For Global Autos” the rating agency also said that efforts to contain the health crisis may dash hopes of a mild recovery in China’s auto industry. Car sales in China declined by 8.2% in 2019, the second successive year of decline that followed a period of unbroken growth from 1990.

The report notes that VW Group produces and sells almost 40% of its cars in China. Moreover, while its main plants are outside of the coronavirus  outbreak’s Hubei province centre, they’re likely to be closed for extended periods by government restrictions aimed at combating the disease. Volkswagen Group has 23 manufacturing sites, for vehicles and components, in China.

The report says that some EUR3bn in dividends that Volkswagen’s Chinese joint ventures pay to their German parent are at risk.

S&P also points out that supply chains are at risk, with largest supplier Bosch expected to be hard hit. Amongst the supplier community, Bosch and Magna have already cancelled travel between Europe and China.

The report also said that Nissan has relatively high risk based on its high exposure and weak corporate performance in recent years. Honda is also exposed due to its production facilities in the Wuhan area; it also relies on China for 30% of its sales.