It was already a difficult year for Japan’s largest carmaker Toyota, dealing with the wake of a year of recalls affecting more than ten million vehicles worldwide. In the aftermath of the the devastating Earthquake on March 11, Toyota and other Japanese automakers could be facing supply interruptions that could compromise business all over the world.
Worry over the extent of the damage to the companies facilities, as well as the Japanese economy, sent stocks reeling Monday morning in Tokyo after relatively calm after hours trading over the weekend. Mitsubishi Motors was down 11 percent in early trading, Nissan by 10 percent and Toyota by 7.9 percent.
The plants potentially most directly impacted by the earthquake manufacture Toyota’s small cars—the Yaris, Scion xB and Scion xD. But in the coming days, the company could find that production of every vehicle will be affected in some way.
Vehicles Built In North America Could Be Affected
Toyota, Nissan and Honda make the lion’s share of the vehicles they sell in North America at U.S., Canadian, and Mexican plants. The Toyota Camry, for example, is built in Kentucky and Indiana. But many parts to these vehicles built in North America have a supply chain that may trace back to a Japanese plant.
Other Japanese automakers have taken similar measures. Mitsubishi Motors Corp. said Sunday it would also halt production at its three Japanese assembly plants through Tuesday, following similar moves by Honda Motor Co. and Nissan Motor Co.
While the companies sort out long-term supply issues, they already know that thousands of cars on the ground, already built, were destroyed or damaged to the point of having to be scrapped. At least 2,300 Nissan and Infiniti vehicles waiting to be shipped to the U.S. and Japanese showrooms were wrecked and many caught fire. The extent of damaged vehicles and ships that carry vehicles abroad was being sorted out over the weekend, with announcements forthcoming from the companies this week.
U.S. Carmakers Could Benefit From Disaster
If the Japanese automakers’ supply of some of its vehicles is impacted for a few months, it could boost market share for U.S. automakers in the short term. No car industry executive wants to talk about who benefits from a disaster, but it is likely that GM, Ford, Chrysler and Hyundai could pick up business if Japanese cars aren’t available when consumers are ready to buy.
Toyota’s market share in the U.S. dropped from 14.3% in 2009 to 12.8% last year despite heavy incentive spending and it is anxious to rebuild the losses.
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