The tragic events in Japan could trigger some short-term changes in automotive market share over the next few months -- potentially opening doors for the likes of Ford and GM.
That's the view of Craig Giffi, vice chairman and U.S. automotive practice leader for Deloitte LLP, who believes supply chain disruptions caused by the disaster could cause a "blip" in the availability of "popular high-mileage vehicles" produced by Japanese automakers such as Toyota. If that turns out to be the case, and gasoline prices continue to rise, American consumers who favor Toyota and other Japanese brands for fuel-efficient vehicles might turn to domestic brands such as the Ford Focus and Chevy Cruze, Giffi says. "American consumers have proven over and over again to be amazingly fickle in their car choices," Giffi asserts. "Gasoline prices go up, they stop buying trucks. Gasoline prices drop a little bit, they start buying trucks. And it turns on a dime." Toyota in a Precarious Position From a consumer-perception standpoint, Toyota might be in the most precarious position. Once regarded by many consumers as the gold standard in vehicle quality, a series of high-profile recalls has "opened the door for U.S. consumers to try something else, and one of the big beneficiaries has been Ford," Giffi asserts. If Toyota's ability to export vehicles to the United States is hampered -- the Edmunds Auto Observer cited statistics that 47% of Toyota's total production in 2010 came from Japan -- it could be just enough to trigger "a door opening for U.S. manufacturers," Giffi says. "In the short term, [Toyota] loses sales. Over the longer term, though, I think it could put people in other brands -- particularly American brands that haven't been there for a long time," Giffi says. "I think [consumers are] going to have a good experience [with some U.S. brands]. And that could bode well for the domestic U.S. manufacturers as a result of the unfortunate circumstances in Japan." So far, Toyota says the impact of the crisis on its North American production has been "limited." The automaker noted in a news release earlier this week that all 13 of its North American factories are operating normally, "although overtime has been curtailed for now to assure we maintain adequate inventories of parts that come from Japan." "Regarding dealerships in the U.S., inventories are good with adequate levels of supply," the automaker said. While Toyota noted that nearly 70% of its vehicles sold in the United States are made in North America, its Prius hybrids -- which could be in peak demand if gas prices continue to rise -- "are built in Japan, and thus impacted more by the production halt there." "But for now inventory levels of the Prius at U.S. dealerships are generally still adequate," Toyota said.
As far as U.S. vehicles sales, Honda might be in the best position of any of the Japanese automakers to weather the crisis. Honda emphasizes that more than 80% of its products sold in the United States are produced in North America, and the vast majority of automotive parts for Honda automobiles manufactured in North America are sourced in the region, according to the automaker. Production in Japan Taking a Hit Like the other Japanese automakers, the earthquake and tsunami have put a crimp on Toyota's production. The automaker has halted vehicle production at all of its plants in Japan through March 22. Nissan, meanwhile, has suspended operations at its Oppama, Tochigi, Yokohama and Nissan Shatai plants until March 20, although part of the Yokohama plant resumed operations on March 13, according to the automaker. "Although all plants, except for the Iwaki engine plant, have been able to repair some damaged facilities and/or equipment, it is still taking time to arrange delivery of parts from our suppliers," Nissan said in a news release earlier this week. "As for the Iwaki engine plant, with aftershocks still heavily impacting the region, restoration activities are expected to take longer than at other plants." Nissan also said earlier this week that its dealerships in Fukushima and Miyagi prefectures, which are nearest the epicenter of the earthquake, likely "suffered severe damage." Honda has suspended production at a number of its plants in Japan until March 20. The automaker said one Honda employee was killed and 17 were injured at Honda facilities during the earthquake in the hard-hit Tochigi area. "From March 14 through 20, Honda will suspend regular operations at all Honda facilities in the Tochigi area, where damage was more serious, and focus on the recovery of each operation," the automaker said. Fuji Heavy Industries Ltd., which makes Subaru vehicles, earlier this week announced that it has suspended production at all Subaru plants in Japan until March 20, "considering the influence of its suppliers in the affected areas as well as conditions of electric-power supply." An Unfolding Crisis The crisis in Japan continues to unfold, as officials struggle to stabilize the Fukushima Daiichi nuclear plant. Giffi acknowledges that there's "a genuine dearth of information" regarding the extent of the damage to Japan's industrial infrastructure, which leaves much to speculation. "You have the potential for Japan to go into a recession, and questions of whether it'll suck the rest of the global economy down with it," Giffi says. Perhaps more likely, though, is that there will be "a falloff of [vehicle] consumption in Japan." "You're going to get a falloff in their ability to export to both the U.S. and the fastest-growing market, which is China. And all of that's going to take its toll on several of these companies." Giffi adds something that many of us have been thinking: "The Japanese as a people and as a country are incredibly resilient, so I would not underestimate their ability to recover strongly." "They certainly have the will, the capital, the intellect and the manpower to do that, and I'm pretty convinced they'll do it the right way," Giffi says. "The question is how big of a job it's going to be." Follow IndustryWeek senior editor Josh Cable on Twitter at @JCable_IW . See Also: