Japanese Parts Paralysis: Worst Situation Since The War

by Bertel Schmitt

Published: April 27th, 2011

japanese parts paralysis worst situation since the war

“This is the worst situation we’ve faced since the war,” a source close to Toyota told the Yomiuri Shimbun. The Japanese car industry is facing post-war-like shortages when it comes to auto parts. Toyota is short 150 parts positions, which can be anything from a bolt to a complete dashboard.

Dealerships are empty – of cars. Test drive cars do double duty as display vehicles. “We get a lot of customers coming in, but we don’t have cars to sell them,” a salesperson told the Tokyo paper.

Major Japanese carmakers have restarted production at the beginning of last week, but plants are only operating at about 50 percent of their normal output. Toyota does not expect to be back to normal before the end of the year.

Japanese automakers have reported a 57.5 percent reduction in production for March – a month that had only its second half affected by the March 11 earthquake and tsunami. April numbers are expected to be worse. What’s more, overseas production is just beginning to be affected. “

In the meantime, Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, said what many refuse to accept: Japanese automakers simply don’t know what the near future will bring.

“Generally speaking, car makers are in a situation where they can’t fix their production volumes, even though this is an importantelement of their business,” Shiga, who is also COO at Nissan, told The Nikkei [sub]. “We hope (investors) will understand.”

#BertelSchmitt #Earthquake #Japan #PartsParalysis

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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SCE to AUX on Apr 27, 2011

Oddly, my local Toyota dealer is swimming in cars.

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- Derek533 on Apr 27, 2011
  
  Same here. In fact, they are still showing pretty hefty discounts as well. As a side note, there is a certain Honda dealer in the DFW area that has their new cars priced over MSRP on the internet while everyone else is discounting. Used cars are also priced higher than normal as well. This is despite the fact that every other Honda dealership in the area is priced lower.
  
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- Scoutdude on Apr 27, 2011
  
  Around here there still running ads for $1000 cash back and 0% financing for Camry's including the Hybrid version.
  
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- Secret Hi5 on Apr 27, 2011
  
  Perhaps the shortage of cars is in Japan, and mainly affects models built in Japan? Anyhow, I'm sure the sales will simply be deferred and create a pent-up demand, so Toyota will cash in eventually. What could be bad is if Japanese consumers turn to "foreign" cars, but somehow I don't think that will happen.
  
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- Heywood220 on Apr 27, 2011
  
  @Secret Hi5 the problem isnt that they dont have any cars now, its that they dont have any cars incoming to replace what they sell. I work at a Hyundai store that has a sister toyota store and they are planning on having real low inventorys at the end of may and juneish. Before all this happend toyota stores had too much inventory. So right now its just they worry about the future and deal with the present.
  
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- CarPerson on Apr 27, 2011
  
  Japan has a shortage of cars because 250,000 people suddenly need a new ride concurrently with the car manufacturers loosing a whale of a chunk of manufacturing ability. Margins will never be higher than for the next year or so.
  
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- APaGttH on Apr 27, 2011
  
  We won't see the impact yet. Consider this. Any parts that come from Japan for US production take 4 to 5 weeks to move through the supply chain literally (e.g. the slow boat from Japan) or literally (customs, trucks/trains to factories, check in/check out). So for five weeks after the earthquake, no issue. Toyota had pretty high inventory levels, about 90ish days of inventory, which is above average for the industry, and near unheard of for Toyota. Ideal inventory levels are more around a 45 to 60 day level. So before the inventory starts to look thin on those lots Toyota North America can go a good 60 to 90 days, for models built in North America, before what is left on the lots are stripper rental grade Corollas, poor selling models like the Camry hybrid and Yaris, and given the price of gasoline I suspect Tundras and Sequoias. Japanese only production vehicles will thin out in 45 to 60 days. Remember, a four to five week supply was already on the slow boat from Japan when the earthquake hit at various points in the chain (from just left the dock hours before the disaster, to riding a car carrier to dealer delivery the morning after the earthquake) Scion might have more exposure because all of their production is in Japan - but given very weak sales levels, probably has a good inventory level.
  
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Zackman on Apr 27, 2011

Japan turning to "foreign cars"? The solution: "Imported from Detroit"!

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Tstag on Apr 27, 2011

Oddly the Japanese rate British cars which is why Toyota proudly sticks made in Britain on any cars sourced from the UK. So JLR will be the clear winners, and they are so reliable.... ;-)

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TOTitan on Apr 27, 2011

"There is only one sun and right now it is located immediately over China." So say the scare-mongers. Heres the reality regarding China. Most of their world leading GNP growth comes from new construction. China continues to build new cities in order to keep the GNP growth crown, even though there isn't enough people with enough income to move there and live in them. Check this out and see if you are still so convinced of China conquering all, Mr Vanilla Dude. BTW they only hold 7.5% of our national debt http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12.

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