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Automobile industry

Japan's Auto Industry Grinds to a Halt After Devastating Earthquake and Tsunami

Strategic Insights

— 1 min read

Most Japanese auto assembly plants will remain closed today, despite being outside the hardest-hit regions, due to the devastating earthquake and tsunami that struck on Friday. Automakers are struggling to determine whether they can build and export cars amidst the rolling power blackouts and infrastructure damage. The three major automakers - Toyota, Nissan, and Honda - have American plants that produce most of the models they sell in the United States, but many luxury and smaller fuel-efficient cars are built in Japan, and disruptions in exports could cost the companies sales.

Key Takeaways:

  • The devastating earthquake and tsunami have caused widespread damage to Japan's infrastructure, including roads and distribution systems, making it difficult for automakers to get their products out of the country.
  • The three major automakers - Toyota, Nissan, and Honda - have American plants that produce most of the models they sell in the United States, but many luxury and smaller fuel-efficient cars are built in Japan.
  • Toyota built 3.3 million vehicles in Japan last year, about 43% of its global output, with more than half sent overseas.
  • Honda's dealers in the United States get more than 80% of their cars and trucks from North American plants, but several Honda hybrid models, including the Insight and CR-Z, are made in Japan.
  • A Honda research and development centre in Tochigi was damaged, causing the death of an employee, and it had to be closed.
  • Nissan's luxury brand, Infiniti, which is built in Japan, may face supply problems due to the tsunami.
  • The tsunami destroyed 1,300 Nissan vehicles at the Port of Hitachi awaiting export to American dealers, as well as 1,000 vehicles at a service centre in Miyagi.

Statistics:

  • 3.3 million vehicles: The number of vehicles that Toyota built in Japan last year, about 43% of its global output.
  • 80%: The percentage of cars and trucks that Honda's dealers in the United States get from North American plants.
  • 1,300: The number of Nissan vehicles destroyed at the Port of Hitachi awaiting export to American dealers.
  • 1,000: The number of vehicles destroyed at a Nissan service centre in Miyagi.

Sources:

  • The New York Times
  • Associated Press
  • Reuters
  • Melissa Tait, Record staff 2011 Waterloo Region Record

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