In general, carmakers are all familiar with interruptions to production from floods, , land slides, blizzards and forest fires. Dealers have seen their new car inventories wiped out by overflowing rivers, surging tides, and punishing hail storms.
For example, a Norwegian cargo ship carrying more than 2,800 brand new cars has sunk after colliding with a container ship in the English Channel in thick fog in the early hours of Saturday.
But what it was in the past was nothing compared to what is now!
With some 500 parts firms affected in the quake and tsunami-devastated northeast, cutting off supply of electronic parts, resin-based products and more, Japan’s auto industry is especially vulnerable to a ruptured supply chain.
Deutsche Bank had forecast production by Japanese automakers at 23 million vehicles but has now reduced that expectation by 15 percent because of continued uncertainty as to how long production of vehicles and parts will be halted.
The investment bank has slashed its forecast for Toyota’s operating profit for next business year by 84 per cent! In the first forecast revisions for Japan automakers since the disaster, Deutsche now expects Toyota’s operating profit for the business year starting on April 1 at 135 billion yen (£1bn) instead of 840 billion yen.
Commerzbank said in a worst-case scenario of a complete shut-down of Japanese production for a month — which it said was not very likely — European carmakers could take a 2.4 billion euro ($3.4 billion) hit to pretax profit in 2011.
Before the disaster, Japan’s $700 billion autos industry was just returning to a mild recovery track following a brutal financial crisis that battered car sales worldwide.
Today, the auto industry is facing again with another big crisis!