Japanese car industry at a standstill

Japanese car industry at a standstill

Japanese car industry at a standstill

Following the devastation of the earthquake and tsunami which ripped through many areas in the North of Japan several weeks ago, several major Japanese car companies have suspended production and some factories of the country's biggest car manufacturers are still shut down.

Tragically, some 7,200 people have now been confirmed dead and the government said it expects the death toll to exceed 10,000. Nearly 11,000 people remain missing and millions have been left homeless.

Toyota, the world's top automobile manufacturer, immediately suspended production at all its domestic car plants and parts factories and has estimated a production decline of 40,000 vehicles. The company has announced that it does not plan to restart production until later this week, and puts its production loss at some 16,000 vehicles.

The factories, even those that have not been severely damaged, could start-up again in the coming days but not for long due to the massive disruption to their supplier network. Toyota Motor Corp resumed the production of repair or replacement parts yesterday, however assembly plants throughout Japan remain closed, spelling a knock-on effect for the production of 95,000 vehicles.

Honda and Nissan have also temporarily halted operations, while Fuji Heavy Industries, maker of Subaru cars, closed five factories having suffered partial building and equipment damage. All three Mitsubishi plants based in Japan came away unscathed by the disaster, however some of its major suppliers were affected, halting plant operations until mid week.

Before the earthquake, Japan was making 37,000 cars and trucks each day. It exported more than half of them. Fourteen percent of the 7.2 core vehicles produced worldwide last year were made in Japan.

Most of the Japanese carmakers are based in the south of Tokyo, which was able to evade the calamity. However, senior importers have reported that the damage to the overall infrastructure in the country could cause a more lasting impact.

A shortage of parts shipped from Japan has already triggered a slowdown of production at the North American plants of Toyota, Subaru and General Motors in an attempt to conserve parts stockpiles. These problems will soon have further repercussions abroad. Japan is the world's second-largest car exporter (after Germany) and more than one in every ten cars produced in the world comes from Japan. In 2010, the export market (including cars and parts) was worth 130 billion dollars.

According to the carmaker, 60 percent of the cars sold in Europe are manufactured in Japan, but it can take about six weeks for Toyota vehicles to travel from Japan to Europe. This means that over the next five weeks, European dealers will still be receiving cars - or car parts - manufactured before the earthquake and the tsunami. Any disruptions in European or American plants would only begin to occur by the middle of April.

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