Published Date:
09-Apr-2011
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The disruptions are going to get a lot worse before they get better, analysts say.

At least half of Japan’s auto production will still be shuttered by early May, a leading research firm, IHS Automotive, predicted Thursday. And because so many other auto plants around the world are dependent on parts from Japan, about one-third of vehicle production globally is expected to grind to a halt during that time.

All told, IHS projects that as many as five million cars worldwide will not be built, out of about 72 million that analysts had expected to be sold this year. Already, automakers have been unable to make 320,000 vehicles that they had planned to produce since the March 11 earthquake and tsunami.

“The worst is yet to come for automotive,” said Michael Robinet, the director of global production forecasts for IHS. “It’s hit Japan, but it will hit outside Japan over the next three to four weeks.”

The bleak assessment came as Toyota announced it would restart production of its Prius and Lexus hybrid cars on Monday but extend its shutdown of other plants in Japan. Also on Thursday, Mazda suspended production at a parts plant, and Honda said it was keeping two of its Japanese plants closed until early April.

Most auto factories in Japan have been idled by the quake and its aftermath, and a smattering of other plants around the world have temporarily stopped production, including a General Motors plant in Louisiana. Currently, 13 percent of the world’s automotive production is out of commission, IHS said.

At the same time, car sales to buyers in the United States and other countries have remained strong. Some dealers are beginning to run low on popular models and transaction prices are rising.

The automakers “have established ‘war rooms’ to monitor the situation and do not expect an ‘all clear’ for some time,” Brian A. Johnson, an analyst with Barclays Capital, wrote in a note to clients Thursday.

“Our base case expectation is for sporadic industry production outages in North America,” Mr. Johnson wrote, with the Detroit companies less affected than those based in Japan. “In particular, Toyota single-sources many components that are used on multiple models, while the Detroit 3 use a more fragmented parts and supplier base.”

A major problem for all the automakers is ensuring a reliable supply of parts from Japanese component makers. Honda gets parts from 10 suppliers located in the radiation zone around the stricken Fukushima Daiichi nuclear plant.

Shortages of an electronic airflow sensor from Hitachi Automotive Systems, for example, led to slowdowns this week at PSA Peugeot Citroën and Opel factories in Europe.

On Thursday, several Peugeot facilities were operating at just 40 to 75 percent of production capacity, said a spokeswoman, Cécile Damide. The company is prioritizing the use of the Hitachi sensors to finish off new and popular vehicles, including the Peugeot 508; the Citroën DS4; and the Peugeot 3008 and 5008 series.