Earthquake likely to affect Japanese automakers' China ventures

13:26, March 16, 2011      

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The earthquake in Japan will pose a serious impact on the supply of components Japanese automakers' joint ventures in China, according to auto industry analysts.

China-Japan auto joint ventures in Guangzhou, such as Guangzhou Toyota Motor Company and Guangqi Honda Automobile Company, can still maintain normal production. But how long this situation can last depends on the follow-up component supply.

"We have decided to prolong production shutdowns in Japan as we need to confirm the damage of its plants and are unsure of the supply of component suppliers," Honda's liaison in China said on March 14. Honda will prolong the production shutdowns of all plants in Japan until March 20 and is uncertain whether it can resume production thereafter.

Toyota Motor has shut down all of its plants in Japan and will not resume production until March 16. It was estimated that output would drop by 40,000 units because of the three-day production suspension. Toyota's output in Japan accounts for about 45 percent of its total output around the world.

Production of joint auto ventures depends on imports of key components.

The production shutdown of these Japanese auto enterprises is undoubtedly bad news for joint ventures in China. Although the current localization degree of joint venture brands has reached more than 90 percent, production may be halted at any time if the supply of key components imported from Japan is ceased.

Honda said that they can only momentarily guarantee one week of normal production in vehicle factories in China. In regards to motor vehicles, production at Guangzhou Honda, Dongfeng Honda and Honda Motors (China) located in Guangzhou, which produce and export the Jazz, will not be affected before this weekend, according to sources within the company.

In regard to motorcycles, the production of Wuyang Honda Motors and Honda Sundiro will not be affected before the end of March. In regards to general products, the production of Jialing Honda and Honda Mingdong will not be affected before the end of March.

"The normal production of Guangzhou Toyota and FAW Toyota will not be affected," Toyota China said. However, the impact on other supporting parties depends on the situation in Japan.

By People's Daily Online

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