A heavy lifting vehicle clears damaged cars at Sendai airport

Japan auto recovery may take months warn experts

Lost auto production due to the Japanese earthquake could mean that it will be months before the industry gets back on track.

With around 500 parts firms hit by the earthquake, stocks of auto parts are fast running out and research firm IHS Automotive has warned that the worst-case scenario could see global vehicle output slumping 30 per cent within six weeks.

The auto industry has ground to a virtual halt in Japan and automakers including Toyota, Nissan Motor Co and Honda Motor Co are issuing daily updates on their production plans in what experts said was a "completely unprecedented" situation.

"We're in a stage where we can only hope for an incremental improvement," said Deutsche Securities auto analyst Kurt Sanger.

The Tokyo-based analyst predicted that return to normal operations would take months rather than weeks.

Modern-day cars can have as many as 30,000 parts, 70-80 per cent of which are supplied by hundreds of component makers.

Japan's auto industry is especially vulnerable to a ruptured supply chain due to its famous just-in-time manufacturing process.

Major supplier Renesas Electronics Corp which manufactures automotive micro control units has confirmed that its Naka factory in Ibaraki prefecture has been affected by the quake.

Experts estimate that a fifth of global auto production relies on products from this factory.

With the supply of electronic parts, resin-based products and more cut off at home, Japanese automakers are building vehicles overseas with whatever stocks they have, but those will soon run out. 

Toyota Motor Corp this week notified workers and dealers in North America that output there could slow.

With earnings certain to take a hit and Japanese transport sector stocks slumping 11 per cent since the disaster, automakers are reluctant to forecast how long the stoppages could last, saying only that a near-term solution is elusive.

"It's very, very difficult to predict when we will be able to restart production," said Nissan spokesman Toshitake Inoshita.

Before the disaster, Japan's $700 billion auto industry was just returning to a mild recovery track following a brutal financial crisis that battered car sales worldwide.

Manufacturers were cutting costs and also ramping up overseas production to weather a strong yen.

As well as stock shortages, automakers also face rolling power blackouts, a shortage of fuel to truck goods, and a nuclear crisis that has put some suppliers near the damaged Fukushima complex off-limits, such as Nissan's engine factory in Iwaki, Tochigi.

The Japan Automobile Manufacturers Association has set up a procurement committee to centralise information on parts suppliers, and reduce any duplication of effort.

That may help speed up information-gathering, but won't rebuild damaged factories or deliver substitute parts, analysts said.

"Normalising operations requires not only repairs at the vehicle assembly plants, but also the restoration of facilities at a wide range of parts suppliers, public service companies, and distributors," said UBS auto analyst Tatsuo Yoshida.

Recent articles

Info Message

Our sites use cookies to support some functionality, and to collect anonymous user data.

Learn more about IET cookies and how to control them

Close