Earthquake, nuclear catastrophe force rethink on Japanese auto industry strategy


Production of automobiles in Japan is forecast to plummet by around 30% to 6.3 million units in 2011 with longer term implications due to these lost sales opportunities, according to Masatoshi Nishimoto, manager of Japan and Korea vehicle forecasts at IHS Automotive based in Tokyo. In fact Japanese OEMs will still be experiencing lost volumes through to September next year as a result of quake damage and power supply restrictions.

Nishimoto expects global vehicle production to come in at 72 million vehicles this year, 2 million lower than initially anticipated prior to the disaster in Japan. He was speaking at the recent Asian Petrochemical Industry Conference in Fukuoka, Japan.

The earthquake and nuclear accident have highlighted the frailties of the Japanese supply chain model in the temblor-prone nation, with offshore assembly operations reliant on key components manufactured in Japan also having been affected. Moving forward, Nishimoto says that Japanese OEMs will look to enhance localization of parts outside of Japan, utilize India and ASEAN nations as export hubs for small vehicles, and increase their focus on China in order to hedge against supply chain risk. "They may minimize production volume [in Japan] and manufacture there only to maintain employment and plant utilization," he notes....
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