The earthquake and tsunami that struck Japan on March 11 this year damaged the Fukushima Dai-ichi nuclear power plant, and sent three reactors into meltdowns.  Now the Hamaoka nuclear plant is being shut down too due to safety fears, adding to the shortage of energy resources in the country.

Auto production was already stagnating as a result of a 20-year slowdown when the 9.0 magnitude earthquake hit Japan.  In March, the production of 404,039 vehicles marked a drop of 57% from the same month the previous year, and also the sixth consecutive month of declining production levels.  As the twin disasters had hit production in addition to supplies to dealers, domestic sales of new trucks, cars, and buses also registered their biggest-ever decline in April.

To cope with the current energy crisis, the government had asked leading manufacturers to reduce the use of electricity by 15%.

With electricity consumption being usually higher in the country during the week than over the weekend, Japanese automakers have therefore decided to take an off on Thursdays and Fridays and manufacture cars over the weekend to save energy and avoid the possibility of blackouts resulting from the power crunch set off by damaged nuclear reactors.  Production at factories will be stopped on Thursdays and Fridays from July to September – the months in which electricity use is highest in Japan. The automakers and auto-parts makers have decided to shift our holidays from Saturdays and Sundays to Thursdays and Fridays, as the companies need to respond with a sense of crisis to the power shortage.

On Saturdays and Sundays, power supplies are adequate and the auto companies can conduct production without limitations.  Some companies may even direct their back-office staff too to opt for days off during the week, and will try to limit power consumption without disruption to production.

The expected power shortage is yet another challenge confronting Japanese car manufacturers that are already grappling with reduced output due to around 500 parts suppliers in northeastern Japan being affected by the earthquake and tsunami.  Besides, the recent disasters also resulted in a number of temporary factory shutdowns as a result of which shipments of key parts to China was also stopped.

Honda Motor Co. and Toyota Motor Corp. think it won’t be possible to get back to pre-disaster production levels till the end of this year, while Nissan is aiming for October.  Toyota has slashed manufacturing at its Chinese plants by around 50-70 % till June 3 because of a shortage of parts.

Japanese automakers are also facing other challenges like high taxes, the surging yen which is reducing the value of exports, pressures to check global warming and competitors in nations that have beat Japan in clinching free trade deals. One third of Japan’s electricity is provided by nuclear energy.  To deal with the power shortage, buildings in Tokyo have reduced lighting, several stores are closing earlier, and people are using the stairs instead of escalators and elevators.  Also, at home, citizens are being motivated to put up with higher room temperatures, prefer fans to air conditioners and unplug their personal computers and other appliances when not in use.

Japanese Automakers Screen Cars for Radiation

Never before had the automobile industry of Japan had to face so many problems and issues.  The fury of the Tsunami and the wide spread destruction caused by the earthquake have caused huge losses to the Japanese industry in general and the automobile industry is one of the worst hit.  Already, the manufacturing of cars has gone done by a good fifty percent and now there are other problems faced by the car industry of Japan.

As you already know, the tsunami has caused great damage to the nuclear plant near the north-eastern coastal areas thereby increasing the harmful radiation levels in the nearby areas.  Although, Japan is trying its level best to contain the harmful radiation leaks, international fears are on the rise.  Plenty of countries import cars from Japan and these countries fear that the cars may contain harmful radioactive substances.  As a result of this, the car manufacturers have started checking the cars for any kind of traces of radioactive materials.

The spokesperson for the JAMA (Japan Automobile Manufacturers Association), Mr. Furukawa, has stated that the tires of the cars and all the materials inside the car are being tested for radiation.   According to him, not even a single trace of radiation has been deducted on the cars waiting to be exported.  This definitely comes as good news.  This entire exercise was required to be carried out as few international consumers had expressed their concern and worry over radiation leaks.

Even after the concerns raised by the international consumers, JAMA emphasized that it was heartening to observe that the sales of the Japanese cars in other countries had not fallen.  Strict measures are being taken to check the radiation levels and for every five thousand cars, a good ten cars are being checked for radiation.  The car manufacturers of Japan have decided to continue this checking process till the entire nuclear plant crisis is resolved.

Leading car manufacturing giant, Toyota is also checking its cars for radiation before exporting them to other countries.  Recently, Toyota checked around thirty cars to be exported to United States.  You would be surprised to know that a good forty six percent of the cars manufactured by Toyota are exported to the United States.  Another leading car manufacturing giant Honda is also carrying out checks on its cars to dispel any kind of doubts.  A good thirty percent of the cars manufactured by Honda are exported to other countries.  A good fifty percent of cars manufactured by Nissan are also going to be shipped to other countries.

Although, there were international concerns regarding the radiation leaks and effects of radiation on the Japanese cars, the Japanese car industry has done a great job by conducting proper checks and ensuring that the cars are not affected by radiation at all.

Scarcity of new cars fuels used car sales worldwide

You are aware that the devastating earthquake and the ferocious tsunami have affected Japan very badly and the car industry is one of the worst hit.  You would be amazed to note that the developments in the car industry in Japan have had far reaching effects in many countries throughout the world.  Many of the auto parts suppliers have been badly hit and they usually supply auto parts to car plants in Europe, United States as well as in Japan.  The manufacturing of cars at these plants has greatly suffered since the supply of auto parts from Japan has greatly reduced.

You would also be astonished to note that the car plants set up by giant Japanese automakers around the world has greatly suffered and many global car plants belonging to these Japanese giants have cut their production to as much as half.  Many experts in the automobile industry feel that this might be a temporary phenomenon, but the world in general is witnessing this change.  You would have noticed that it is not only the car industry but also the automobile industry in general which is greatly suffering.  The manufacturing of trucks has also been greatly affected.

It is not only the Japanese car industry that is being affected, the car companies of other countries have also had to reduce their manufacturing of cars.  The inventories required for producing a car have greatly reduced.  All these factors have resulted in the rise in the price of used cars.  What is even more worrying is that the gas prices have also risen to a great extent.  You would be surprised to hear that the prices of used cars of some of the leading car brands have increased up to a good ten percent.  Since the month of January, the prices of Honda Civic and Toyota Corolla which have been used for around three to five years have also appreciated a good ten percent.

Even when the car industry is going through troubled times, one group of people has greatly benefited and they are the car dealers.  Instead of waiting for the new cars to arrive, people are now opting for fuel efficient cars that are compact and small.  This problem is likely to continue till the problem and scarcity of auto parts continues.  People usually prefer brand new and small compact cars. But with the manufacturing of small compact cars at an all time low, people are opting for used small compact cars, thus increasing the prices of small compact cars greatly.

Giant car makers Toyota and Nissan have predicted that they would be able to start full production only by August end due to scarcity of auto parts.  Due to the increase in demand for used cars, the auction prices of many leading brands of trucks and cars have gone up as much as fifteen percent.  So, definitely the prices of used cars are going to increase and this is going to be the trend for some time now.

Panic Car Buying of Japanese Cars As Shortages Worsen

The deadly earthquake and tsunami that struck Japan on March 11 this year resulted in production shutdowns affecting the supply of cars like the Toyota Yaris, Toyota Prius hybrid, the Mazda2 and Honda Fit subcompacts, as well as many other Japan-built economy cars.

Now it appears that the disruptions in the auto industry are about to worsen.  Much of the auto industry in Japan – the second largest global supplier of cars – remains idle.  Though few plants suffered serious damage, with water and electricity supplies being fleeting, it is hard to say when operations at the factories will speed up again.  Some experts think this could only be possible as late as this summer.

The Japanese auto manufacturers who have closed most of their local facilities say a few of their overseas plants might also shut down to conserve supplies.  Honda and Toyota said they expect shutdowns at their North American plants.  At Honda, production is expected to be hit after April 1.  That is because though most of its components are sourced locally, a few key parts still come from Japan.  Read more »

Toyota, Honda suspend plant operations

The recent mega-earthquake and tsunami that struck Japan have had a negative impact on the operations of many auto manufacturers in the country.  Many Japanese automakers have had to either suspend or reduce their plant operations since parts manufacturers in many regions including Tohoku that were affected by the quake, cannot easily procure parts.

About 20,000 to 30,000 parts are needed for manufacturing vehicles and automakers cannot assemble them if even one part is not available.  Recently, automakers had increased vehicle exports mainly to China and Asian countries, but now their presence in overseas markets could diminish due to the deteriorating supply.

Honda Motor Co. and Toyota Motor Corp. in Japan announced plans to put off resumption of car assembly given the current problems in parts supply after the destruction in the Tohoku region following the March 11 earthquake and tsunami.  Since the two major auto manufacturers show no signs of resuming production, vehicle output will surely be suspended for a long period.

Toyota, which is the world’s largest car maker, had earlier decided to suspend car assembly till Tuesday, but has now decided not to resume operations until Sunday.  So the automaker will stop car assembly for a total of 11 operating days, exceeding the 3 ½ day suspension after the powerful earthquake in 2007 in the Niigata Prefecture.  During this lengthy period, Toyota will stop production of around 140,000 units. Read more »

Technorati Tags: Honda, Japan, Toyota

Auto Industry Shuts Down in Post-Quake Japan

Japan is one of those few countries that are well prepared for natural disasters like earthquakes.  But even in Japan there was chaos and widespread destruction and suffering after its northeastern coast was battered by a massive earthquake and tsunami on March 11.

The earthquake whose magnitude has been recorded as 9.0, unleashed huge tsunami waves up to 10 meters (33 ft) in height within minutes of striking Japan, washing away cars and ships and even buildings in the coastal area near the epicenter.  Several Japanese car companies had to completely suspend vehicle production.

Many automakers like Nissan, Subaru, Honda, Mazda, Mitsubishi, Toyota and Suzuki have not only their headquarters in Japan, but also key manufacturing facilities located there as well.  Since many of these plants have now been shut down this could also affect sales of models in countries overseas.

One of the factors preventing a regular production schedule at Japanese auto facilities is the concern for employee security and safety.  In addition, infrastructure has been severely damaged in major industrial areas, there are rolling blackouts being introduced because of the damage to the power grid, and suppliers are struggling to logistically organize the delivery of vital supplies and components to the ravaged areas of the country.

Since major auto factories are located close to the most badly affected earthquake areas, five of Japan’s largest automakers have temporarily shut down their production lines.  Toyota has suspended activities till around March 16.  But Nissan (March 18), Honda (March 20), Mazda (March 20), and Subaru (March 21) will be confronting a longer idle period.  At Suzuki, plants will be closed until March 17, while Mitsubishi has already resumed production of its own after a short shutdown.

Another fall-out of the recent tragedy is that Japanese automotive parts have had their shipments to American and European automobile companies disrupted.  Read more »

Technorati Tags: Japan, Japanese car, automotive

Suzuki plans to sell cost-effective Maruti Cars in Japan

It has been 26 years since Suzuki Motors Corp. launched its first car in the Indian market under the brand name Maruti Suzuki.  The company is now set to launch low cost Maruti car models in the Japanese automobile market, from where even Korea’s auto giant Hyundai Motors withdrew after stiff competition there had endangered its growth plans.  The first Maruti model to be introduced in Japan will be the Maruti A-Star.

Maruti’s importance is growing in the global plans of Suzuki Motors.  It currently contributes to over half of the Japanese automaker’s profits and generated about 33% of its total turnover each year rising from just 10% in 2005-06.

According to S. Nakanishi, Managing Director, Maruti Suzuki, considering the manner in which Maruti models are capturing the global market, the Japanese car market is certainly not far away.  The A-Star meet’s Europe’s stringent emission norms and is perfectly suited for hitting the highly developed market of Japan, where even top global car makers are finding it tough to survive.

Maruti’s A-Star, though relatively new in the Indian market, contributes to almost 25% of the total exports (800,000 cars) by Maruti Suzuki.  Currently, Maruti is developing several contemporary models, some of them being small cars, to be launched soon.  By 2015, Suzuki will be investing Rs 60 billion (around $1.3 billion) in India to take Maruti’s  production capacity per year to 1.75 million cars, and will also establish a new R&D center for producing cars on its own for the global market . Read more »

Technorati Tags: Maruti car, Japan, Japanese car

Beat Gasoline Prices with Fuel Efficient Cars

A few days ago, the price of crude oil briefly touched $100 per barrel ($25 per liter) for the first time since late 2008. Rising crude prices inevitably drive up gas prices, and then not just the consumers but auto manufacturers begin to get worried.  In 2008, when oil last hit the $100 mark and gasoline prices rose above $4 a gallon ($1.1 per liter), several auto companies were caught unawares with large line-ups of unsold trucks.

Rising prices of gasoline
Today gas costs over $3.19 per gallon ($0.9 per liter) on an average, that is, 53 cents more than a year ago.  If the turmoil in the Middle East persists, prices could shoot up to $4.

Not surprisingly, the soaring oil prices are fueling the demand for more fuel efficient cars.  Consider this.  If you switched from a vehicle giving 30 mpg (13 km per liter) on highways to another that delivers 40 mpg (17 km per liter) , assuming gas costs $3 a gallon, you would save over $4,000 throughout the vehicle’s lifetime.  And if gas prices rise to $4 per gallon, those savings could increase to $6,000 or so.

Automakers worldwide are now being forced to enhance the efficiency of their cars.  Five years back, few vehicles gave a mileage of above 30 mpg.  Nowadays, you’ll find more vehicles delivering 40 mpg in city driving or on the highway mainly as a result of stricter government rules and technological advances.  There are around 20 highly efficient 2011 model year vehicles today, which is thrice the number available back in 2006.

All new vehicles sold in 2016 will have to reach a fuel efficiency of around 35.5 mpg, which is about 40% higher than the current standards.  Today, regulators are even considering efficiency levels touching 62 mpg by 2025.

Technology to the rescue
Automakers are able to enhance fuel efficiency of their cars through advances in technology.  Some of these include the use of turbochargers, diesel engines, newer batteries, materials like aluminum for reducing the weight of vehicles, and more efficient tires, and also developing newer methods for improving aerodynamics.

High-mileage vehicles in the market
Better mileage vehicles come with high upfront costs, but they also offer long-term benefits.  So let’s check out the fuel-efficient cars available today.

Japanese cars with hybrid, combustion and electric engines with modern technology generally get 40 mpg or above.  These cost more than gasoline-run cars, but they compensate for the higher upfront costs through lower fuel expenses during the lifetime of the car.

Hybrid cars like Toyota Prius and the Insight and Honda Civic hybrids have a regular gasoline engine in addition to a big battery for powering the car.  Honda Civic hybrid prices start from $24,000, while the Toyota Prius costs about $23,000.  The price of a basic Civic with a combustion engine however starts around $16,000.

Nissan’s all-electric car – the Leaf, costing around $ 32,780 can give 100 miles on battery power, after which it needs recharging.  Other niche electric cars though also meeting the benchmark of 40 mpg are too costly for middle-class buyers.