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Friday 30 September 2016
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Earthquake Disrupts Auto Production: Toyota Hurt Worst

Earthquake Disrupts Auto Production:  Toyota Hurt Worst

Deadly earthquakes will shut down virtually all Toyota production in Japan this week, torpedoing exports of Lexus products, the Prius hybrid and some trucks at a critical time when Toyota is trying to get more crossovers for the U.S.

Suspended vehicles include the hot-selling Lexus RX and NX crossovers and the Toyota RAV4. Also hit are the Toyota 4Runner and Land Cruiser SUVs and the Lexus GX and LX SUVs.

The stoppage comes as other automakers cut back on output or reassess production plans after the quakes in southwest Japan knocked some suppliers offline. Affected suppliers still had no time line for resuming operations.

For Toyota, the interruption in crossover supply comes at a bad time for the world’s biggest automaker as it scrambles to boost light truck sales to tap booming U.S. demand for the vehicles.

Toyota, with a relatively car-heavy lineup, has been unable to fully capitalize on the market shift toward crossovers. Toyota’s shutdowns come amid a worsening supply chain crunch triggered by twin earthquakes that hit the area around Kumamoto city on Japan’s southwestern island of Kyushu.

The first of the latest quakes, a 6.2-magnitude temblor, struck the night of April 14. A second stronger one, measuring 7.0-magnitude, rattled the area again early last Saturday morning.

The twin disasters killed more than 40 people and injured more than 1,000, with rescue workers continuing to dig out others trapped under collapsed buildings, local media reported.

The latest earthquakes are the biggest test yet of Japan’s efforts to fortify its supply chain against external shocks since the March 2011 earthquake-tsunami disaster knocked domestic output offline for months. Since then, Japanese automakers have tried to double-source parts and introduce backup manufacturing plans.

Only three operations will remain open: One line at a Hino truck plant, a Daihatsu plant and a line that makes the extremely low volume Toyota Century luxury limousine.

All other domestic lines at Toyota will be down, affecting virtually every nameplate exported to the U.S. The list includes the Lexus ES, LS, IS and GS sedans as well as the RC coupe and CT hatchback. Also on hold is production of the Scion tC and xB, as well as the new Mirai hydrogen fuel cell vehicle.

Toyota could not say how many units of production would be lost, but the company and its affiliates produced 312,365 vehicles in Japan last April, implying daily output of around 16,440 vehicles. This is the second time this year Toyota has had to scrub production because of supply chain woes.

In February, the company suspended production at all assembly lines in Japan for six days. A Jan. 8 explosion at a steel factory in Japan torpedoed supplies of steel used in parts such as engines, transmissions and chassis systems.

The explosion occurred at an Aichi Steel Corp. plant in Chita city in Aichi prefecture, Toyota’s home region and its main production base.

Other automakers are idling production lines as well.
Nissan Motor Co., which has two plants on the southwestern island of Kyushu, where the quakes were centered, had scrubbed production on Saturday.

Nissan said that it would resume output at the plants the following day “following an assessment of our plants and supply chains.” Both of its plants were slightly damaged.

Mitsubishi Motors Corp. suspended part of a shift at one plant this Monday and said it would cut one shift in its entirety on Tuesday and Wednesday for lack of parts. Mitsubishi’s shutdown affects output of mini-vehicles for the Japan market.

Mazda Motor Corp., which has its two Japanese plants in the western part of the country, said it had confirmed steady parts supply to keep its factories running through April 22. Mazda is still assessing the impact beyond then, a spokeswoman said.

Meanwhile, Subaru maker Fuji Heavy Industries Ltd. and Honda Motor Co. were monitoring their supply chains, but didn’t expect interruptions. Both those manufacturers have the bulk of their operations in eastern Japan, though Honda has stopped operations at a motorcycle factory in the quake zone.

The critical weak links are suppliers hit by the quakes, and one name is a familiar bottleneck: Renesas Electronics Corp.

History is repeating itself with Renesas, a key maker of the microchips controlling everything from fuel injection to airbags, halting operations at a plant in the quake zone.

Renesas crashed the global supply chain in 2011 when a massive earthquake in Japan took one of its plants off-line for months. That factory was in northeastern Japan — the one hit by the latest quakes is the southwestern city of Kumamoto.

photo credit: hngn.com