After Japan's Disasters — The Bumpy Road Back for Automakers
Talk about a morning with wildly inconsistent messages about the auto industry's ability to build vehicles in the wake of the Japan earthquake and tsunami, considering the following announcements all in a span of a few hours:
- Honda says it will halt productionat two of its Japanese plants through April 1st. (uh oh, here we go with more production cuts)
- Toyota says it will resume building the Priusand two Lexus hybrids in Japan. (good news, maybe the worst is behind the industry)
- IHS Automotive says the worst is yet to come for production halts in North America as the Big 3 are hit with parts shortages from Japanese suppliers. Just as troubling, IHS estimates the world will lose 155 of it's global auto production(610,000 vehicles) in the month of March. (yikes, ok so things are not better)
- Nissan announces it is once again building the LEAF electric car in Japan and it expects normal production in the North America. (ok, feeling more upbeat)
What this morning shows is that we're in the middle of a 2-4 week period where we will see the auto industry take two steps forward getting Japanese plants back on line, only to then take a step back because a small company making a particular component is nowhere close to getting operations back on line.
So the production of new cars and trucks will start and likely stop as the industry works this out.
The big issue remains the troubled state of suppliers north of Tokyo. There are many that have been knocked out and without the electronic sensors, semiconductors, or integrated electronics coming from those suppliers, the automakers in Japan, and increasingly around the world, are finding they can only make limited plans for building new cars, trucks and SUV's.
So what happens next?
Look for automakers to continue to have periodic production halts, especially with the Big 3 here in the U.S., as they conserve their components.
When possible, they'll also shut down the weakest performing lines, to ensure production continues with the top selling lines. Again, with many components that can not be done. But when possible, we'll see that approach by automakers. Click on Ticker to Track Corporate News:
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