Vehicle, parts shortages a reality Fallout from quake, tsunami could extend … – Search

May 25, 2011
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The earthquake and tsunami that hit Japan on March 11, along with the failure of several key nuclear power facilities in that country, have had a tremendous impact on the automotive industry. With vehicle and parts plants in Japan experiencing rolling blackouts, and much of the country’s key logistics and shipping infrastructure damaged, auto production was cut by as much as 40 percent to 50 percent by some Japanese OEMs. This has led to vehicle shortages at dealerships and shutdowns at Japanese-owned auto plants in other parts of the world.

But while most of the attention in the auto sector has been on the impact of the disaster on new vehicle production, the dealership repair center may be the next to feel the effects. Although as of early May there had not been any significant repair parts shortages reported, by mid-summer it could be difficult to find certain electronic components and other parts.

A number of parts suppliers had their operations hobbled by the disaster, or in some cases nearly wiped out entirely. Even those that didn’t sustain direct damage have had difficulty ramping up production because of a lack of power or logistics capabilities.

“We’ll have to watch for the next several weeks to see how things play out,” says Eric Fedewa, director of global powertrain and components forecasts at analyst firm IHS. “The automotive supply chain is so complicated, it can be difficult to determine who is buying what components from which supplier, so it could be some time before we can really see the entire impact.”

There have already been signals that fixed-ops and parts managers should prepare for potential shortages. On March 29, Toyota announced that it was limiting repair parts sent out to dealers to just those components that were considered critical. The company placed 233 parts on its “controlled” list; this was done, in part, to discourage dealerships from “hoarding” parts from suppliers who had suffered significant damage from the quakes or the tsunami. Those parts included shock absorbers, radiator supports, tailgate hinges and oil seals, among others.

“It makes sense to do that, but it also suggests that they don’t have an unlimited supply of parts,” says Paul Taylor, chief economist at the National Automobile Dealers Association (NADA).

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