The effects of the March 11 earthquake that occurred in Japan are now having a visible impact on automotive supply chains.  Toyota is the first of the big three Japanese automotive OEM’s to acknowledge that supply of new vehicles could be significantly impacted during the upcoming summer months.  Reports in both The Wall Street Journal and the Financial Times indicate that Toyota has informed its dealers that parts shortages will significantly curtail production operations in Japan, North America and Europe based production facilities. While Toyota officials indicate it is still too early to ascertain specific cutbacks, nonetheless expectations are now being set for what may come. Inventories of finished vehicles are currently less than 60 days of sales in North America.

Toyota’s North American plants, which are already operating on a constrained schedule, will be idled for five additional days in April, including an extended three day Easter holiday.  The company has also announced that it would halt production at five European plants located in France, Poland, Turkey and the UK for up to eight days late this month and in early May, and operate at a reduced rate for the remainder of May.

The WSJ quotes a Toyota spokesperson as noting that ships carrying new vehicles will depart Japan every two weeks and make subsequent stops at six North American ports to help speed deliveries.

The two other large Japanese OEM’s, Honda and Nissan have refrained from significant comment as to supply, but one has to speculate that both will be impacted in the coming months. Subaru has indicated that it would halt production at its Indiana plant in the U.S. for three days this month because of parts shortages. Having smarted from the previous sudden-unintended-acceleration crisis that occurred a year ago, Toyota is being much more proactive in its communications to consumers and dealers.

Parts shortages for finished vehicles will also have an impact on automotive service and parts suppliers supporting after-market needs.  Toyota had communicated last week that certain parts may be placed on allocation while other parts will be only made available for documented vehicle repair needs.

North America and Europe based automotive OEM’s could benefit from this crisis, but then again may face similar parts supply shortages.  Meanwhile, alternative parts suppliers outside of Japan are being overwhelmed by requests for alternative supply or sourcing certification, perhaps causing more supply restrictions as the summer wears on.

If you directly reside in the automotive industry, please share your own observations as to what you have been hearing in terms of the supply situation over the coming months.

Bob Ferrari