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Monday, March 8, 2021

Largest US dealer expects Japanese auto shortage

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DETROIT (AP) — Cars made by Japanese manufacturers will be in short supply at showrooms this spring and summer because of last month’s earthquake and tsunami, the head of the largest U.S. dealership chain said Monday.

AutoNation Inc. CEO Mike Jackson said in an interview with The Associated Press that customers will first see shortages of vehicles made exclusively in Japan. Then parts shortages will slow down production of Japanese-brand cars assembled in North America.

“Everybody’s in crisis meetings every day trying to figure out how to keep the global production system working as best as possible and adapt to the circumstances,” he said.

The March 11 disaster mostly damaged auto parts factories in the northeastern part of Japan, the world’s second-largest supplier of cars and parts. But shortages of those components, plus disruptions of electricity and water, have forced car plants in that nation to close or limit production for nearly a month.

Automakers, Jackson said, have told him the car shortages will last anywhere from two to four months, and AutoNation should expect a 30-to-50 percent cut in shipments of Japanese-brand models. U.S.-based automakers also will see shortages, although it likely will be limited to fewer models, some features or paint colors, Jackson said.

Jackson said models made only in Japan, such as the Toyota Prius gas-electric hybrid, Honda Fit subcompact and Nissan Rogue small crossover vehicle, will be most affected.

He said consumers can expect to pay higher prices for the models in short supply because dealers will be less likely to discount them.

Jackson, whose chain has 243 new vehicle dealerships in 15 states, said his stores have enough Japanese-brand autos to sell for the next two months, but that supply will start to drop in the coming weeks.

Supplies will fall even if production restarts quickly because it takes about a month for car-carrying ships to travel from Japan to U.S. ports.

“While you have the supply (now), the reality is that because the plants aren’t producing, that’s going to dwindle going forward,” said Scotia Economics Senior Economist Carlos Gomes.

More than half of AutoNation’s new vehicle sales last year were from models made by Japanese automakers, and about two thirds of those were assembled in North America.

Japan is falling 37,000 vehicles short of normal production every day, Gomes said. The country has made 500,000 fewer vehicles than normal since the earthquake hit.

Companies are working with suppliers to find parts made in other countries, or even to shift production to other parts of Japan.

Toyota and Honda on Monday didn’t dispute Jackson’s comments, but each said they have good supplies now and are working hard to avoid shortages.

But Jackson said no matter what they do, there still will be shortages in the next few months.

“It’s already impossible to avoid. Another week or so and the plants in Japan will basically have been at minimal production for a month already,” he said.

Other auto dealers said Monday that Japanese carmakers had also warned them of shortages.

Jeff Dyke, executive vice president of operations for Sonic Automotive, another large chain, said he’s hoping the predictions are conservative.

“If you’re in my shoes, listening to what manufacturers are telling you, they always under-promise and over-deliver, so we know the worst-case scenarios,” he said. His chain has more than 100 dealerships in 15 states.

Industry analysts say Detroit automakers, which also get parts from Japanese suppliers, will start to see production cuts because of the earthquake.

“To think that the Detroit Three will escape this would be in error,” said Michael Robinet, director of global production forecasting at IHS Automotive.

Parts shortages from Japan already are affecting manufacturers outside the country. Just last week, Ford Motor Co. and Nissan Motor Co. said that some North American plants would be closed part of this month, and Chrysler CEO Sergio Marchionne has said his company will see disruptions.

Jackson still expects the U.S. auto market to keep recovering through the end of this year. He said AutoNation will manage through any shortfalls.

Copyright © 2011 The Associated Press. All rights reserved.

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