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U.S. brands hit by Japan disaster

By Claes Bell ·
Saturday, March 26, 2011
Posted: 7 am ET

Two weeks after the massive earthquake hit Japan, industry experts are beginning to get a better sense of the the disaster's impact on the global auto industry, and the results are pretty grim.

Ford has stopped production of black F-150s because of a shortage of pigment produced in Japan

Ford has stopped taking orders for black F-150s because of a shortage of pigment produced in Japan

We're not just talking about shortages and higher prices for Japanese cars assembled in Japanese factories and shipped overseas. Because of the interconnectedness of today's globalized auto industry, shortages and production shutdowns in Japan will eventually lead to production problems of varying magnitude for just about every car company on the planet, the Big Three included. From Bloomberg:

If parts plants affected by the quake don't return to operation within six weeks, global auto output may drop as much as 100,000 vehicles a day, said Michael Robinet, vice president of Lexington, Mass.-based IHS. The industry produces 280,000 to 300,000 vehicles daily, he said.

"Most vehicle manufacturers will be affected by this," Robinet said in a telephone interview. "It will be very difficult for any major automaker to escape this disaster."

About 13 percent of global auto industry production is down right now and production of about 320,000 vehicles has been lost, mostly in Japan, Robinet said.

Auto executives have refrained from forecasting lost production as their managers seek other sources for parts. If solutions aren't found soon, most major automakers will experience disruptions by mid-April because supply networks are intertwined, Robinet said.

We're already beginning to see the effects of parts shortages on American automakers. Historically known for its preference for black, Ford has stopped taking orders for trucks in black and a number of other colors because of a shortage of pigments normally produced in Japan, according to a story this week in The Wall Street Journal.

And it's not just paint. Japanese companies supply many of the computer parts that go into everything from infotainment systems to the drivetrain itself in a big chunk of the world's autos. General Motors has already been forced to halt production of small pickup trucks at its plant in Shreveport, La., because of a shortage of mass airflow sensors normally produced in Japan, according to The Wall Street Journal.

The upshot is consumers should expect car prices at dealerships to rise as supplies of vehicle components and finished vehicles dwindle. We talked a little bit about how customer outlays for Toyota Prius models have already risen since the disaster; expect more of the same as automakers uncertain about future production capacity try to get what they can for their existing inventory. The price of car repairs may jump, too, thanks to shortages of replacement parts.

I also wouldn't be surprised to see reliability problems and recalls jump on the cars built this year and maybe even next year. Auto companies are going to be scrounging parts from wherever they can to try to keep finished autos flowing off their assembly lines. That may lead them to use parts that are less reliable than those produced by suppliers in Japan, and even one unreliable part can cause big problems in a car.

On the bright side, this will probably push up used-car values for those looking to sell a car right now. Finding a new car to replace it might be iffy, though.

What do you think? Have you seen any evidence of problems at dealerships in your area? Will you be putting off a car purchase until this blows over?

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1 Comment
Rusty Shackleford
March 29, 2011 at 4:59 am

We are overconsuming and polluting our world. While the effects are nowhere near as dramatic or traumatic as the earthquake/tsunami, eventually the results will worsen to the point of being equally, if not more, deadly.

The only way to avoid that scenario is to limit our consumption. Each person of means needs to do so.

It's sad that it takes such a horrific event to cause us to produce, buy, and use so many cars, but we need to consider other means of transportation. Use a bike. Walk. Use public transportation. If you do buy a car, get as small a car as you can. Take fewer trips. Find ways to work at home, or closer to home.

Or continue to do what so many are doing anyway... and if the consequences don't affect you so much, maybe it'll be your children or grand-children or great grand-children who'll regret your actions.