IMPACT ON AUTO MAKERS Japan’s Earthquake and Tsunami
Sep 13, 2014
IMPACT ON AUTO MAKERS
Japan’s Earthquake and Tsunami
The World Bank’s Chief Economist, Justin Yifu Lin, said on Wednesday that the tsunami in Japan will not
have a long term impact on the world economy…
"This is a one time shock and overall it will not have a long term impact on the global economy…”
"According to our estimates, the effect [on the Japanese GDP] will not be that large…”
We are sure the Japanese economy will bounce back quick.
With reconstruction, Japan can increase its growth rate.
"We hope the world community will give assistance to the Japanese government.”
Friday's earthquake and tsunami left parts of Japan's economy
"frozen", but analysts forecast that it will bounce back later this year.
The country's global car giants are expected to be
amongst the worst affected.
Cars waiting for export burn after an 8.9
magnitude strong earthquake on March 12,
2011 in Tokai, Ibaraki, Japan.
In the six months following the Kobe earthquake of January 1995, shares
of Toyota, Honda and Nissan fell 22%, 35%, and 40% respectively,
according to Tong Yang Securities, and needed up to 13 months to
recover.
Toyota, Honda, Nissan and Subaru (Fuji Heavy Industries) have stopped operation in
several of their factories after the 8.9 magnitude earthquake. Toyota has closed
down 3, Honda has shut 2, Nissan has closed 4, and Fuji Heavy Industries, the maker of
Subaru cars, has closed 5 factories.
Nomura suggested that annual operating profits at Toyota, Honda and
Nissan would be dented by between 3% and 8% this year.
Firefighters hose down smoldering cars Saturday following Friday's devastating tsunami in Hitachi, Ibaraki Prefecture, northeast of Tokyo.
Some of the country's leading producers, including the world's biggest carmaker, Toyota, have closed
all of their plants in the country.
According to Automotive News, Toyota dispatched 2 convoys of rescue vehicles -- 6 water tankers, 2-fuel tankers, and 9 cargo carriers -- to heavily-damaged northern Japan carrying food, water, and portable
toilets. Toyota wanted to bring relief to an area where it operates 2 parts plants, as do 2 Toyota subsidiaries.
All 4 facilities had been shut down since the earthquake on Friday. The mission got some welcome news. A Toyota spokesman said there were no reports
of deaths or injuries, though the plants themselves suffered some damage.
Toyota Motor Co said it will continue to halt operations at its 12 main
assembly plants in Japan, extending the suspension until March 22. The
closure of the factories, since Monday, will result in lost production of
95,000 vehicles.
But it will restart production of spare parts on Thursday at seven plants
near its base in Toyota City, central Japan, to be shipped to service
centers for repairs to Toyota vehicles already on the road. From
March 21, Toyota will also begin making car parts at the same plant for assembly factories overseas, the
company said.
Honda Motor Co reiterated its plans to suspend all production in
Japan until at least Sunday. [ID:L3E7EE109]Honda
manufactured 69,170 cars in January in Japan, where it made
24 percent of its cars.
Both Honda and Mazda announced that they were suspending production for the rest of the week. For Honda, it means the loss of 16,600
vehicles. Overall, HIS figures a global production loss of some 36,700 vehicles a day. That means more demand for used
Japanese vehicles and hence higher prices.
Nissan Motor Co said output has been stopped at all four of its car
assembly factories in Japan. Nissan made81,851 cars in January in Japan, where it manufactured
23percent of its vehicles.
"We've stopped production as of today," said Andy Palmer, Nissan's
head of production, in an interview with BBC World Business Report in
Tokyo, in line with its rivals.
Fuji Heavy Industries Co said all five of its car and car parts-related
plants for its Subaru-brand vehicles in Gunma prefecture, north of
Tokyo, will be closed until at least Sunday.
"It's not just our factories, it's also some of our suppliers. Some of our suppliers are even in the exclusion zone around the
nuclear plant."
Mazda Motor Corp said they will suspend
production at two plants in southwestern Japan until March 20, but have not decided on how to proceed
after that.
None of the carmakers feel able to predict when production will be
resumed.
Goldman Sachs said in a report that rough calculations indicated
the profit impact of stopping production for one day would be
about 6 billion yen ($74.3 million) for Toyota and 2billion yen for Honda
and Nissan.
In the U.S., Bank of America Merrill Lynch figures that big, publicly-traded car dealers have the most exposure to the Japanese catastrophe, because production halts
mean fewer exports of Japanese brands, and thus fewer sales. AutoNation (AN, Fortune 500), Penske Automotive Group (PAG, Fortune 500), and Group One all get more than a third of their sales from
Toyota, Honda, and Nissan. Overall, however, Bank of America figures the impact will be small --
equivalent to one day of supply disruption over a full year.