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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 pace | Different 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. |
Infrastructure issues | |
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. | |
To begin with, they need uninterrupted power supplies, which analysts say will take some time given the situation at the Fukushima Daiichi plant. | |
"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. | |
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." |