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Toyota and Honda delay restart amid part supply issues Toyota and Honda delay restart amid part supply issues
(40 minutes later)
Japanese carmakers Toyota and Honda have delayed plans to restart production saying that they cannot get the parts they need.Japanese carmakers Toyota and Honda have delayed plans to restart production saying that they cannot get the parts they need.
Toyota will not restart production before 26 March. Honda Motors says it has extended a production shutdown until at least 27 March.Toyota will not restart production before 26 March. Honda Motors says it has extended a production shutdown until at least 27 March.
The firms have halted operations after Japan was hit by a deadly earthquake and tsunami.The firms have halted operations after Japan was hit by a deadly earthquake and tsunami.
Analysts said the shutdown would cost companies millions of dollars a day.Analysts said the shutdown would cost companies millions of dollars a day.
A spokeswoman for Honda said that the company now expects delivery of new vehicles in Japan to be delayed.A spokeswoman for Honda said that the company now expects delivery of new vehicles in Japan to be delayed.
Different paceDifferent pace
Assembling a car requires thousands of parts to be put together. These are provided by different suppliers.Assembling a car requires thousands of parts to be put together. These are provided by different suppliers.
Most of the parts are shipped to the manufacturers a short time ahead of the assembly line requirements, analysts said.
This means that most car factories have relatively low inventories, which can create shortages in supply.
Until the supply chain is sorted out analysts warn that plants will not be able to operate at full speed and there may be patchy production across the country.
"Each supplier has to be able to reach the levels before the devastation to reach the full production plan," said Vivek Vaidya of Frost & Sullivan."Each supplier has to be able to reach the levels before the devastation to reach the full production plan," said Vivek Vaidya of Frost & Sullivan.
As different vendors get back on track at a different pace, the supply of parts will also be inconsistent in the short to medium term, analysts said. Infrastructure issues
There might be an excessive supply of parts for one model of the car, while the other models might face a shortage. To get back to full speed, Japan's car manufacturers have not only got to overcome their own issues, but also wait for external factors to get sorted.
According to analysts this will mean the manufacturers will have to make some tough choices. To begin with, they need uninterrupted power supplies, which analysts say will take some time given the situation at the Fukushima Daiichi plant.
"They will have to get the product mix correct," said Mr Vaidya. "A significant percentage of Japan's electrical generating capacity has been taken offline, and is unlikely to be restored soon," said Aaron Bragman of IHS Global Insight.
"Getting that right will be a challenge," he added. To make matters worse for the manufacturers, a shortfall in power supply in one part of Japan cannot be replenished by transferring power from another part of the country.
Different power grids in Japan function at different frequencies making it impossible for power to be transferred.
"The issues with the Japanese auto industry are quite serious," he said
"The situation is unlikely to return to normalcy any time soon."