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Analysis: Quake Could Reorder Auto Industry

Analyst says crisis could lead to 30% cut drop in auto production.

by on Mar.25, 2011

Building a solid relationship with suppliers can be as critical as building the right car, says a new study - which also found that Toyota's supplier relations have been suffering.

Analyst statements that auto production could drop by as much as 30% as part shortages become a huge problem shows that automakers may need to rethink their strategy in choosing suppliers.

IHS Automotive said Thursday that the crisis surrounding the mega earthquake and tsunami that rocked Japan on March 11 could reduce global automotive output by nearly a third or 100,000 vehicles in coming weeks.

The crisis raises some major issues including:

  • Should automakers require suppliers to have multiple locations capable of producing critical parts?
  • With the Japanese automakers facing the most critical parts shortages, could the crisis reshape the automotive landscape, leading to huge shifts in marketshare?
  • Will automakers raise prices as supplies of new cars begin to dwindle?