Car Plants Still Out of Action After Japan Earthquake
Car plants as far away from Japan’s earthquake/tsunami epicentre as Louisiana in the USA are starting to experience fallout from the disaster. General Motors recently announced that the Shreveport Assembly plant has been closed due to parts shortages for a model similar to the Isuzu KB sold here, and the growing supply crises looks set to get worse as Japanese assembly operations and their suppliers remain out of action until well into the week.
Car plants rely on literally hundreds of other second and third tier suppliers for components and all it takes is for one to fail to stall production once inventory is used up. With most Japanese plants using this cost-saving ‘just-in-time’ approach to parts delivery from nearby suppliers, there is seldom more than enough for a few days’ production kept on site.
South African franchises of brands like Nissan and Toyota do source sophisticated assemblies such as engines and gearboxes from Japan but generally keep enough stock locally for at least one month’s production. We are looking increasingly likely to be affected not so much in terms of models built here, but more in terms of delays receiving low volume derivatives which are imported fully-assembled. This includes the likes of Prius and RAV4 from Toyota and the GT-R and 370Z sports cars from Nissan.
Brands like Honda, Suzuki and Mitsubishi, which import all their vehicles, are also likely to be affected both due to parts shortages but also because of damaged shipping infrastructure. Honda South Africa receives its hybrids, Accord and Civic four-door models from Japan as does Lexus and Toyota with its Land Cruiser range. Shortages could impact on prices, with dealers reluctant to offer any discounts on existing stock as they face the possibility of supply problems in the months ahead. 
In terms of the hybrid market, at least one battery maker has shut down, threatening the supply of hybrid cars which are becoming increasingly popular with the predicted fuel and oil price hikes in 2011.
