Japan Quake: Big Automakers Hit, Little Guys Spared (Except Subaru)

Edward Niedermeyer
by Edward Niedermeyer
japan quake big automakers hit little guys spared except subaru

Amidst the rubble of earthquake and tsunami-racked Japan, a strange phenomenon: Three of the smallest local automakers suffered no interruption in production, while the very largest seemed to be hit the hardest. Toyota, Honda, and Nissan have all suffered some kind of production interruption since the quake hit, while Mazda, Suzuki and Mitsubishi remain untouched according to Automotive News [sub]. In a tragedy like this, some might be tempted to ascribe this division of suffering to some universal sense of justice, a cosmic leveling of Japan’s automotive playing field. But, as the map above proves, this twist of fate is purely geographic… Mazda, Mitsubishi and Suzuki happen to have all of their plants located well south of the affected area near Sendai. Besides, Subaru, one of Japan’s smallest automakers, closed five factories. There’s no making sense of a mess like this…

Toyota’s string of bad luck seems to be continuing, if not purely at the hands of quake or tsunami damage. According to the latest word from the world’s largest automaker

The plants that have stopped production are Toyota subsidiary plants that produce parts and vehicles, including:
  • Toyota Motor Hokkaido Plant
  • Toyota Motor Tohoku Plant
  • Central Motor Corporation Miyagi Plant, which also produces the Yaris model.
  • Kanto Auto Works Iwate Plant, which also produces the Scion xB and Scion xD.

But even though Toyota itself was largely spared, the market is punishing it. Reuters reports that Wall Street is

The massive earthquake in Japan on Friday fueled defensive options trades in large Japanese companies and in an exchange-traded fund that tracks Japanese equities

“Traders are primarily buying put options, perhaps as a hedge against existing long stock positions in case of a prolonged shutdown in their automotive and parts production facilities in Japan,” said Jon Najarian, a co-founder of stock and options website optionMonster.com in Chicago.

And, according to yet another Reuters piece, Toyota’s low inventories of Lexus luxury vehicles could be especially vulnerable to interruptions. And, according to Automotive News [sub]

The shutdown could affect exports to the United States of such cars as the sedan, and , as well as the subcompact, Accord sedan and CR-V crossover. The tremblor also affected production of the Acura and Infiniti lineups.

But so far, the worst news comes out of Honda and Nissan, namely that

At least one person died at Honda’s r&d facility, and fires erupted at two Nissan plants.

The LAT gives more details on the Honda situation, notingHonda Motor Co. has shut three plants through Monday, including one where it makes the Fit sub-compact car and the top of the line Acura sedan that are exported to the United States. Its research center in Tochigi also was damaged, killing a 43-year-old man, and at least 30 other Honda employees were injured in the region.The WSJ takes Nissan, reportingNissan Motor Co. said it had immediately suspended operations at five factories in Fukushima in the north east, and Tochigi and Kanagawa prefectures, north and south of Tokyo. Small fires broke out at its Tochigi and Iwaki plants but have been extinguished, the company said.Both Infiniti and the Nissan Leaf EV could be affected, notes the Journal, but Renault (which owns nearly the majority of Nissan’s stock) could be the one sweating its exposure. Meanwhile, though supply issues are still being resolved, the Japanese automakers’ commitment to Just In Time (JIT) manufacturing practices mean any supplier interruptions will be noticed soon. Of the major global supplier firms with operations in Japan, only Denso is reporting damage at one factory.More than damage at any one firm, though, what’s driving the market fears seems to be worries about Japans road, power and port infrastructure. Even if the factories themselves are fine, they still have to get their products to market. For now though, the opportunities to shift production to the US seem “limited,” according to an analyst speaking with Automotive News [sub]. Needless to say, everyone will know a little more about the situation tomorrow.
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  • BlackPope808 BlackPope808 on Mar 12, 2011

    So what The Truth About Cars is saying is: America paid its karmic dues when our automobile industry pretty much tanked on us...required us to bail them out...and continues to lead a fantasy market on the road to oblivion?

  • SVX pearlie SVX pearlie on Mar 12, 2011

    I wonder why Subaru shut down. They're well inland. Earthquake damage perhaps?

  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
  • Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
  • Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !