A car dealership’s window is broken after a strong earthquake in Koriyama, Fukushima Prefecture, Japan in this photo taken by Kyodo on March 17, 2022.

Kyodo| via Reuters

DETROIT – A major earthquake this week in Japan is causing additional problems for the already limited global automotive supply chain, which continues to cope with the problems caused by the coronavirus pandemic and Russia’s ongoing invasion of Ukraine.

As companies monitor and assess the potential residual effects of the 7.4 magnitude earthquake on their supply chains, the auto companies most directly affected included Toyota Motor and Renesas Electronics, a major supplier of semiconductor chips to the automotive industry. .

Research firm LMC Automotive expects the earthquake this year will lower car production by between 25,000 and 35,000 cars and trucks, adding to already lowered expectations due to an ongoing shortage of semiconductor chips and the war in Ukraine.

“This is just another layer on top of an already fragile system where we’re seeing a lot of pressure on the manufacturing side of the business,” said Jeff Schuster, LMC’s president of the Americas. “It’s definitely something the industry didn’t need at this point.”

Toyota said Friday it would suspend operations at more than half of its factories in Japan. The world’s largest automaker by volume said 18 production lines in 11 plants (out of 28 lines in 14 plants) would be shut down for three days next week due to supply problems caused by the earthquake.

“Due to the parts shortage caused by suppliers affected by the earthquakes, additional adjustments will be made to manufacturing operations at some factories in Japan as follows,” Toyota said in a statement.

The shutdowns were announced a day after Toyota cut production by 150,000 units from April to June amid growing supply chain uncertainty.

The global auto industry has been battling a global shortage of semiconductor chips for more than a year due to plant closures at the start of the coronavirus pandemic. The chips are the most notable problem amid global supply chain problems caused by the pandemic, rising costs, inflation and the Russian invasion of Ukraine.

“The main reason for this is that it has a new impact on a system that is already limited,” said Stephanie Brinley, chief automotive analyst at S&P Global Mobility, formerly IHS Markit. “It seems to have a short-term effect… but it’s just not something the industry is dealing with right now.”

Renesas, which reportedly makes nearly a third of the microcontroller chips used in cars worldwide, operates three factories near the earthquake epicenter in northeast Japan, according to the company.

The Tokyo-based semiconductor supplier said it is trying to restart its factories and bring them back to pre-quake production volumes by Wednesday, including one as early as Sunday.

Renesas’s importance in the global automotive semiconductor supply chain was highlighted last year after a factory fire prompted automakers such as Ford Motor to significantly cut production at plants, including many in North America.

Ford teams “have been monitoring the situation closely and have been actively working to determine what impact this could have on our operations,” a company spokesperson said Friday. General Motors released a similar statement.

Smaller Japanese automaker Subaru said Friday it would suspend production Friday and Monday at two car assembly plants and an engine and transmission plant due to the earthquake.

“Subaru Corporation will temporarily suspend production at its auto plants due to interruptions in the supply of certain parts, as the operations of its supplier plants for those parts have been affected by the earthquake,” Subaru said in a statement.

Spokespersons for Japanese automakers Honda Motor and Nissan Motor said there was little to no impact on their operations as a result of the earthquake. A Honda spokeswoman said the company was suspending a night shift at a Japanese factory when the earthquake struck.

This post Toyota, major chip supplier to cut production due to earthquake in Japan

was original published at “https://www.cnbc.com/2022/03/18/toyota-major-chip-supplier-to-cut-production-due-to-japan-earthquake.html”