Japan earthquake rattles carmakers in China


Beijing : The global supply chain disruption following the magnitude 9 earthquake and ensuing tsunami in Japan has sent shockwaves through auto makers in China, especially companies that are funded by Japanese car makers.

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Many Japanese carmakers and parts producers have shut down operations as the March 11 disaster damaged factories and infrastructure and caused delays in the shipment of raw material.

Japan’s northeast region is a major production base for auto and electronics components, Xinhua reported.

Toyota, the world’s largest carmaker, announced Tuesday that it would extend the shutdown of its 11 factories until Saturday, the second week after the catastrophe, in spite of a shortage in auto parts.

Honda said that the production suspension would continue through Sunday.

Nissan, another major Japanese carmaker, resumed parts production at some plants Monday. It planned to resume vehicle production Thursday.

But lingering fears remain over the possibility that the production could be affected by continued power outages and infrastructure problems.

The joint ventures of the three auto giants in China announced that it would not halt production in the short term due to their stockpile of auto parts. But in the mid- and long-term, they might have to reduce or even halt output if Japanese suppliers failed to ship parts due to the slow recovery.

Managers at Guangzhou Toyota and Guangqi Honda, the two joint ventures with Guangzhou Automobile Group, said their inventory of auto components could sustain normal production for two weeks through March end.

Dongfeng Nissan and Dongfeng Honda, another two joint ventures, have also said that they are capable of maintaining normal production until the end of the month, but warned that disruptions could not be ruled out next month.

Japanese car companies get 60 to 70 percent of their parts from China and the remaining key parts from Japan.

“If the parts suppliers in Japan takes too long to resume production, the joint ventures will be affected,” Xinhua quoted a senior executive at a Sino-Japanese automaker as saying.

Some of the local brands are also likely to confront production disruptions as they receive key components from Japan to boost quality, says the China Passenger Car Association (CPCA).

Some carmakers would run out of stocks at this month-end, said the CPCA, adding that if they did not adjust the operation pace, the production of some models could be halted under extreme circumstances, it added.

“Some domestic auto makers will have to find alternative parts suppliers from other countries,” said Song Donglin, an economist and the president of Jilin University of Finance and Economics.

The disruption could prompt Japanese auto parts producers to move some of their production to China and also bring opportunities to both local and other foreign brands, as vehicle imports from Japan become affected, said Su Hui, an official at the China Automobile Dealers Association.

The toll in the earthquake and ensuing tsunami risen to 9,523 while 16,067 people were unaccounted for in northwestern Japan by 09.00 a.m. local time (0000 GMT Thursday), said the National Police Agency.