Japan earthquake: Impact on automotive industry – Sunday update image

One week on from the devastating earthquake and tsunami that hit Japan, the situation is still critical.

Most of Japan’s auto industry is on shutdown. Idled plants are costing companies hundreds of millions of dollars.

HONDA Motor Co
Damage was widespread in the Tochigi area, where Honda has a number of operations. Honda Motor Co., Ltd. has confirmed the fatality of a Honda R&D associate at the Tochigi R&D Center, when a wall collapsed in a cafeteria. The associate was male, 43 years old.
In addition, 17 Honda associates were injured in the Tochigi area from collapsing ceilings and other damage during the earthquake (initial reports put the number of injured at 30).

• The suspension of automobile production, which began March 14, was extended today for an additional three days– through March 23 — at the following locations: Sayama Plant at Saitama Factory (Sayama, Saitama); Suzuka Factory (Suzuka, Mie).
• The same March 23 timing applies at the Kumamoto Factory (Ozu-machi, Kikuchi-gun, Kumamoto), where motorcycles are produced.
There is no immediate impact on Honda’s operations in North America. More than 80% of Honda and Acura products sold in the U.S. are produced in North America, and the vast majority of automotive parts for Honda automobiles manufactured in North America are sourced in the region.


The initial freeze in production, originally said to last until the past Tuesday, has not been extended for an additional week, until March 22. In an attempt to limit the financial losses that will come as a result of the production freeze, Toyota also announced its decision to resume the production of spare parts for vehicles already on the market beginning Thursday, March 17.
Toyota’s shutdown affects about 95,000 units of production, of which 60 percent is for shipment to markets, including the U.S., Steve Curtis, a spokesman for the carmaker’s sales unit in Torrance, California, said March 17. U.S. inventory levels remain “normal,” he said then.

Nissan Motor Co

Based on the currently available supply chain, Nissan Americas manufacturing operations plan to follow a normal production schedule for at least the next seven days. The supply chain is being continuously assessed and the next update will be provided on Friday, March 25.

Nissan Americas has visibility of more than 1,500 Nissan LEAF vehicles either in transit from Japan or at port in the U.S. This number includes the shipment of more than 600 Nissan LEAFs which left port in Japan on March 10, the day before the earthquake. Nissan Motor Co., Ltd. this week initiated the monitoring of vehicles made in Japan for any traces of radioactive material.
At this moment the company said output has been stopped at three of its four car assembly factories in Japan.
Nissan said all North American manufacturing plants will continue to operate on schedule. It does not expect any short-term impact on sales or availability of cars and trucks. In addition, the company has a 50 days’ supply of vehicle stock in North America or already in transit from Japanese ports.

Mazda Motor Corp

Mazda Motor Corporation previously announced the suspension of production at its Hiroshima and Hofu plants from the night shift on March 14, until March 21, in the wake of the disaster. Mazda has now decided to resume temporary production at both plants from March 22, producing replacement parts, parts for overseas production and vehicles utilizing “in-process” inventories.

A decision on the resumption of full-scale production of both parts and vehicles will be made at a later date.

Mitsubishi is running three plants on Wednesday and Thursday, using inventory parts.
Direct impact over other automakers:
The effects of shutdown plants are not limited to Japanese companies. For global car companies reliant on Japanese parts in production, setbacks in the supply chain can slow or even shut down manufacturing.

GM said Saturday it is cutting unnecessary spending companywide as it assesses the impact of production disruptions from the earthquake and tsunami in Japan.
The move will help the automaker preserve cash as it deals with the financial implications from shortages of parts made in Japan, a company spokesman said.

Also, General Motors Co. stopped work at two European factories and is mulling production cuts in Korea amid growing uncertainty over how its plants around the world will be affected by the crisis in Japan.
In the U.S., GM will shut down a plant in Shreveport, La., starting next week. Mr. Akerson said the shutdown was to ensure adequate supplies at all U.S. plants, and that the company is unsure how their supply chain will be affected.

Volvo Cars issued a warning yesterday stating that its inventory of some components was down to a week’s worth of production and that output could be disrupted unless it was able to replenish its stocks soon.Volvo is estimated to purchase around ten percent buys of all its auto components from Japan.

Renault said on Friday that its South Korean Renault Samsung Motors unit would defer overtime hours planned from March 19 through the following week at its plant in Busan.
The factory imports components from Japan, including a 6-cylinder engine for Samsung’s SM7 saloon car and transmissions for all of its vehicle range.

DAIMLER AG’S Japanese truck unit Mitsubishi Fuso Truck and Bus Corporation will extend its production halt until Tuesday
BMW is still unsure whether the disaster in Japan will affect production of its models. The firm’s UK managing director Tim Abbott told Autoblog it was simply too early to tell what affect, if any, the disaster will have on production.

British parts maker GKN Plc said on Tuesday it may have to cut the number of components it makes because some of its Japanese customers, which include Mitsubishi Motor and Nissan Motor may be unable to take deliveries.

Autoliv Inc., the world’s biggest producer of car safety products like seatbelts and airbags, said production had been halted at one of its three Japanese plants, although all the plants were undamaged. The affected plant was shut due to damage to infrastructure, the company said.
Autoliv supplies Nissan Motor Co., Toyota Motor Corp., Mitsubishi Motors Corp., Honda Motor Co. and Mazda Motor Corp. At $206 million, Japan accounted for 11 percent of Autoliv’s fourth-quarter sales.

updated Sun. 20 – 5:38 AM CST
photo credit: italo_pol