Japan earthquake: Japan bank to finance auto parts makers image

The state-backed Development Bank of Japan and a nationwide auto-parts association are planning to set up a fund in June with assets of around $620 million to help auto parts makers.

“The East Japan Great Disaster seriously damaged supply chains of auto parts makers, and we have been discussing possible financial support for them,” said the official, who declined to be named.

“Our negotiation is in the final stage,” the official said. “The size is likely to be as big as 50 billion yen,” he said, adding that the bank is scheduled to make an official announcement soon.

The fund is designed to finance major auto parts manufacturers, and these makers are expected in turn to invest in subcontractors. The aim is to infuse money into small and medium-sized auto parts manufacturers, which the DBJ and major financial groups do not have regular business contacts with. The DBJ hopes this will speed up the rehabilitation of the auto parts industry.

In April, auto sales had declined at a record pace, according to a report published in May by the Japan Automobile Dealers Association. Sales were down 51 percent year-on-year.