25 April 2011

Much talk in the national press this week about the production shutdowns at Japanese owned car plants in the UK – but it’s important to realise that European (and US) carmakers have been affected by the aftershock of the Japan earthquake too. This is not just a Japanese problem.

Ford’s Genk plant in Belgium, working flat out to produce the Mondeo, S-Max and Galaxy, was shut completely for a week in mid-April and GM dropped shifts in both Germany and Spain at factories where Corsa is built. PSA Peugeot Citroen reduced production at plants across Europe in late March, apparently due to a shortage of air-flow sensors.

The only two majors that appear to have escaped unscathed are Renault and Volkswagen Group. Toyota is now saying it will take around six months for production to return to normal levels.

We already knew that car making was a global industry but the PSA situation highlights just how dependent production lines are on apparently minor components. Not only that, they have to be shipped halfway round the world with a typical six week lead time.

Japanese micro-chip manufacturer, Renesas Electronics, controls about 41% of the global automotive market for micro-controllers and 90% of its production capacity is based in Japan. Its major plant, at Naka in northeast Japan, has been out since March 11 and will not resume production until mid-June. Even then, it will only be running at about 10% capacity.

A global shortage of new cars, just at a time when worldwide demand appeared to be recovering, changes the economics of the whole industry.

Although waiting times for selected models have been growing, UK auto retailers and their customers are broadly used to getting new cars as and when they want them – hence the ‘haggle’ mentality. Take that ease of supply away and, yes, volumes will drop, but margins may well recover.

If you’re on a forecourt this week, good luck! It would be good to hear from you; we’ll be here if you want to share any gossip: rupert@auto-retail.com

Rupert Saunders

Tags: auto plants, factories, Japan, Tsunami