Japan Earthquake:  Automotive industry situation – Saturday update image

Just when their full comeback from a business slump triggered by the 2008 global financial crisis was almost in sight, Japanese automakers are faced with another challenge — natural disasters.

Two months after the Great East Japan Earthquake, less than 30 percent of businesses in the automobile, electronics and other processing industries who answered said they should be able to gain access to enough components and other supplies by July, data by the Economy, Trade and Industry Ministry showed.
Automotive giant Toyota revealed its quarterly results on Wednesday, and the results were not pretty. The world’s largest automaker saw profit decline by more than 75 per cent in the first quarter.
The Japanese fiscal year ended only three weeks after March 11, but in that time, the company says it lost 170,000 vehicles worth of global auto production, and suffered 110 billion yen worth of financial damages. Production remains at less than half of what it was before the quake.
Reports earlier today suggested a second delay might push North American Prius V sales into 2012, but Toyota’s North American operations have announced that the delay of the Japan-market Prius Alpha is due to the earthquake, but all indicators suggest the Prius V will come to North America this fall.

Currently, Toyota says it can only build 1,000 Prius Vs with the advanced lithium ion battery a month, although it is capable of assembling around 2,000 nickel metal hydride versions. As a result, it says that export models might not be built until production is ramped up toward the end of 2011.
Nissan, also affected significantly by the quake, said it will resume full production globally by October. The company on Thursday reported a return to profitability in the fiscal fourth quarter ended March, the only one of Japan’s three big auto makers to report improved earnings for the period, but it cautioned that its business outlook remains uncertain.

Production at most of Nissan’s plants in Japan had now returned to normal. Normand said problems that remained for Nissan in Japan were patchy electricity supply at its one engine plant, which was damaged badly in the earthquake, and electronic component suppliers which were not yet at full production. Normand said 40 of Nissan’s 600 suppliers in the earthquake-hit area were “heavily affected”, with production halted at these sites. This figure had, however, now fallen to a single digit.

Honda is anticipating a full resumption by the end of the year, after they were forced to halve output following the natural disasters. Fumihiko Ike, Honda’s senior managing officer, told a news conference in April that its business outlook in the April-June quarter will be “considerably severe,” adding that the second quarter could be even worse as the adverse effects on its overseas operations are expected to emerge later than on its operations in Japan.

In the US, Tim Schermerhorn, parts and service director at McCarty Motors in Laramie, Wyoming said that they are already seeing waiting periods of up to 30 days on some parts, but luckily they are only on non-essential accessories at this point. Shortages are just starting to hit the dealers as they receive fewer cars and stockpiles of extra repair parts dwindle.

In the coming months chances are that you will see lots of empty spaces on new car lots, so if you are thinking about buying a new car you might want to expedite the buying decision so that you can still find the right car to meet your needs. Dealers will also be very eager to take your trade-in in order to keep their lots stocked with cars and trucks.