Manufacturing News

Toyota, Nissan say Chinese plants have adequate parts supply

Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. said car production in China was unaffected after the strongest earthquake on record in Japan forced parts makers to halt plants.

Output at Toyota's China ventures is continuing normally, said Liu Peng, a Beijing-based spokesman, without elaborating.

Plants operated by Nissan have so far suffered "no impact" since last week's temblor in Japan, said company spokesman Akihiro Nakanishi.

Honda's Chinese factories have adequate parts supplies to ensure production until the end of the week, said Takayuki Fujii, a Beijing-based spokesman.

Japan's three largest automakers all closed plants after the magnitude-9.0 earthquake and an ensuing tsunami struck the nation on March 11.

Japanese automakers accounted for about 20 percent of deliveries in the world's largest car market last year, according to figures from the China Association of Automobile Manufacturers.

Nissan buys 90 percent of the auto parts used at its China plants locally, Nakanishi said from Guangzhou, where Nissan has a factory. The Yokohama-based company's factories in China can operate without disruption until the end of the month, he said.

"Given that most suppliers are located at or near the automakers' car assembly plants, resumption of car assembly would signal the resumption of supplier operations," said Steve Man, analyst at Samsung Securities (Asia) Ltd. in Hong Kong, adding that this is a positive sign.

He estimates current inventories can sustain production for about two months.

China Inventory
Guangzhou Automobile Group Co., partner of Honda and Toyota, has as many as three months of the core parts needed for production, CLSA Asia Pacific Beijing-based analyst Scott Laprise wrote in a note to clients, citing the company.

"Our past experience tells us the Japanese joint ventures in China keep little inventory to improve overall efficiency," Laprise said. "This changed last year after the Honda parts factory went on strike."

Honda's Chinese venture with Dongfeng Motor Group Co. has enough inventory to continue production for at least a month, Citigroup Inc.'s Hong Kong-based analyst Gerwin Ho wrote in a report.

China Dealerships
Guangzhou Auto and Dongfeng Motor's dealerships on the mainland also have about a month's worth of car inventory, said Nomura International in a report issued Wednesday.

If 70 percent of Japanese domestic capacity could resume production within one month, sales of their China joint venture would not be affected, the report said.

While Toyota has reopened seven factories located in Aichi in central Japan, it has halted auto assembly and closed most other parts plants until March 22, the company said.

Honda has said all its plants in Japan will be closed until March 20.

Nissan, Japan's second biggest carmaker, and an affiliate today reopened one assembly plant in Kyushu, southern Japan. The company said it would soon open a second plant.

Two Nissan factories will remain closed until March 20, while another will operate partially. No decision has been made on reopening a sixth plant, Nissan said.

Toyota sold 846,000 vehicles in China last year, up 19 percent from last year.

China became Nissan's second largest market last year, overtaking the U.S., as the carmaker boosted sales 36 percent to 1.0 million vehicles.

Honda's sales on the mainland gained 12 percent last year to 646,631 units. The automaker has said it expects deliveries to increase 10 percent this year.

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