Taiwanese Automakers Facing Disruption in Supply of Key Parts

Taipei, March 14, 2011 (CENS)--Due to partial suspension of production by their Japanese parent firms in the wake of the strong earthquake hitting the northeastern Japan, Taiwanese automakers are facing the threat of disruption in the supply of key components and parts, unless the former can resume production in five days.

The crisis will impact the Taiwanese auto market and may seriously affect total auto sales this year, originally projected at 350,000 units, since Japanese brands, Toyota, Nissan, and Honda, boast over 50% market share in combination.

Presently, Japanese brand autos are mostly assembled by their local partners or branches, including Ho Tai Group for Toyota, Yulon for Nissan, and Honda Taiwan for Honda. Market players noted that despite high local-content rates, those local assemblers still rely on their Japanese parent firms for the supply of two key parts: automatic gearbox and chassis.

Taiwanese automakers noted that the extent of impact on them are still uncertain, pending on the scope and length of production suspension on the part of Japanese parent firms. Overall speaking, they only have the stock of key parts for five days and may have to suspend their production, should supply fail be resumed in time.

Market players pointed out that if Japanese automakers cannot resume production in a short time, Taiwanese automakers may have to seek the supply of key components and parts from Europe and the U.S. In addition to higher costs, it is also uncertain whether the alternative supply source can help them avoid disruption of production, due to longer shipment time needed.

The problem has overshadowed the original rosy outlook for the local auto market this year; the sales agents of Japanese makes all have large backlog of orders in hand.

Following the outbreak of the strong earthquake, Toyota has suspended the operation of two assembly plants and two components plants in northern Japan for the review of their safety and extent of damage. Nissan has also suspended the production of four factories, while Honda has closed one damaged component factory.