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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?


Japanese Industry Facing Huge – Potentially Global — Problems in Wake of Quake, Tsunami

Key operations shut in Japan, impact abroad could be severe.

by on Mar.14, 2011

Tsunami-damaged cars that had been ready for shipment to markets overseas.

Much of the Japanese auto industry appears to be shut down, in the home market, in the wake of last week’s devastating earthquake and tsunami, and industry managers say they’ll be making decisions on when to get back to work on a day-to-day basis.

At least one Honda worker was killed during last week’s temblor, with numerous other injuries reported.  At least 1,000 already-assembled vehicles are known to have been destroyed by the tsunami.  What is unclear is how much of an impact the situation will have on the global networks operated by manufacturers like Toyota, Honda and Nissan.

“There will be some effects,” warned analyst Jim Hall, of Detroit-based 2952 Analytics.

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Part of the problem in assessing the impact of Friday’s natural disaster is the extent of damage to the overall Japanese infrastructure.  Communications have been disrupted in some regions, making it difficult to get a full assessment of the situation at some industry facilities.  Further problematic is the ongoing crisis at a three-reactor Japanese nuclear plant that may be undergoing at least a partial meltdown.

At the least, that and additional damage to the island nation’s electric power grid has already forced the imposition of partial, rolling blackouts across the country to conserve power.