Japan is, after China, the world’s second largest car producer. In the first ten days after the March 11^th earthquake and tsunami, the Japanese auto industry lost approximately 65 percent of its capacity. That is 338,000 units. Toyota alone has lost production of about 140,000 vehicles since March 14, says AP [via MSNBC]. What will happen next? Will it affect us, and how?

Amongst banks and brokers, staid Morgan Stanley is one of the respected ones. Morgan Stanley always had a presence in Asia and manages many Asian funds. Japan’s Mitsubishi bank owns 21 percent.  Morgan Stanley has no interest in talking Japan down. However, in a 34 page research note, sent out today, titled “Japanese Earthquake: Global Supply Chain Implications”, Morgan Stanley paints a dark picture: “A prolonged disruption of Japanese component supply could have a significant impact on 2011 auto production and profitability.” Not just in Japan, the world over. It is likely to depress sales: “ The impact on US SAAR could be severe in May.”

Instead of editorializing, let’s just give you the salient parts. You may want to have a stiff drink first. And your broker’s phone number nearby. Read More >

After a long weekend (Monday was Spring Equinox), Japan came back to work today. Most of the Japanese auto industry did not.

Japan’s largest automaker Toyota, and Japan’s third largest, Honda, won’t be making any cars this week. Japan’s auto production is paralyzed. Read More >

For days, I have been trying to get a clearer picture of what is really going on outside of the largely intact gates of the major Japanese carmakers. Nobody is talking. Most keep mum because they don’t know. Some don’t talk because they don’t want to.

Now there is a rare glimpse into the matter. It has been written by Kevin Krolicki with the help of two colleagues at Reuters. Kevin is the Detroit bureau chief of Reuters. He writes about cars a lot. Comes with the territory. Kevin and I share a common affliction: A Japanese wife. A week ago, Kevin found himself going against the stream of expats that were mobbing the planes out of Japan.

Two days after the quake, Kevin went from Detroit to Tokyo to help the team of Reuters reporters in Japan. Read More >

New twist in GM’s hunt for the elusive carpart: Opel’s Eisenach plant will resume normal operations tomorrow, Tuesday. It was reported to suffer a serious shortage of Japanese parts. Read More >

There are gallant, yet disturbing news coming from Japan’s automaker front. Japanese automakers unite to cope with the disaster. “Automakers have set up a joint headquarters for support measures and are sharing damage reports and other information,” reports  The Nikkei [sub]. “They have a plan that aims to provide more effective support by dividing their forces by region and building teams on the fly. Staff from, say, Toyota may end up lending a hand to a parts maker that does business with, say, Nissan.” According to the Nikkei, Japan’s automakers also have come to a “silent understanding” to not to compete for who might be first to restart production.  What is causing the sudden unity amongst former bitter rivals? Read More >

It is one of those strange twists of fate that Toyota’s arch-nemesis, GM, would be one of the first overseas automakers to experience shutdowns caused by a lack of supplies from tsunami-devastated Japan. Read More >

“The ripple effect of the stoppages to supply and production in Japan will be felt in many parts of the world, including the United States, China, and Europe, as many key parts and technology are exported to global operations from Japan, writes IHS Global Insight in a research report. “Disruption to production of parts that are unique and cannot be easily shifted has the potential to hit output badly at several automakers in the near term.”

First to be hit will be Japanese production sites overseas which often import 20 percent or more of their parts from back home.

However, plants owned by U.S. or European companies are not immune. Read More >

Amidst the rubble of earthquake and tsunami-racked Japan, a strange phenomenon: Three of the smallest local automakers suffered no interruption in production, while the very largest seemed to be hit the hardest. Toyota, Honda, and Nissan have all suffered some kind of production interruption since the quake hit, while Mazda, Suzuki and Mitsubishi remain untouched according to Automotive News [sub]. In a tragedy like this, some might be tempted to ascribe this division of suffering to some universal sense of justice, a cosmic leveling of Japan’s automotive playing field. But, as the map above proves, this twist of fate is purely geographic… Mazda, Mitsubishi and Suzuki happen to have all of their plants located well south of the affected area near Sendai. Besides, Subaru, one of Japan’s smallest automakers, closed five factories. There’s no making sense of a mess like this…

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If you only get excited by the sausage of a car and not by the sausage making of a car factory, hop on to the next article, because this will utterly bore you. Everybody gone? Alright, talking to myself again. We’ve always said, not really in jest, that two industries profit the most from just in time manufacturing: The real estate industry and the trucking industry. Honda wants some of that money. Read More >

Germans bought 211,056 cars in January. It could have been more than twice as many – if automakers would make enough autos. According to a study by PricewaterhouseCoopers, published in the German Newspaper Die Welt, Germans are waiting for 264,000 cars which they had ordered, but which the car companies are unable to deliver.  And who do Germans blame? The Automakers?

No, they blame the Americans and Chinese who snap up the cars before the Germans can lay their hands on them. Read More >

Today, none of the 50,000 workers employed at Volkswagen’s Wolfsburg plant have to punch in at work. The factory is waiting for parts. You may think that is their good or tough luck.

Not so, says Dan Sharkey, a Detroit lawyer who counts many auto suppliers as his clients. The shortages affect us all. Parts shortages are “”beyond a trend; it’s an epidemic,” Sharkey told Automotive News [sub]. These shortages are stopping assembly lines around the world, just when demand is beginning to pick up.

Here is a current snapshot, taken by Automotive News: Read More >

Volkswagen workers in Wolfsburg are looking forward to a long weekend. No work on Monday, come back Tuesday. Are people not buying enough cars? Im Gegenteil. They are buying too many. Volkswagen is seriously running out of parts. Read More >

It’s been a tough 2010 for Saab, which is trying to survive on a $40k sedan, a bunch of holdover models and the promise of a Cadillac SRX clone (coming Spring 2011). Sure there are plans for future cars, but no money to develop them. Meanwhile Saab’s US sales are down 44 percent through November of this year, with only 4,371 units moved (3,721 of which were 9-3s). So with the Swedish government probably wondering why it helped keep the struggling automaker alive, it’s funding a transmission development program staffed by Saab engineers. Bloomberg reports:

Saab and Fouriertransform AB, the Swedish government’s venture-capital firm, will staff the company with about 50 engineers from Saab’s powertrain division… The venture, which will be formed at the start of 2011, will develop transmission systems, such as gearboxes, for Saab and other carmakers

Saab is already jointly developing electric AWD systems and drivetrains in a venture with the supplier American Axle, making the deal with Fouriertransform its second JV in the supplier realm. Analysts hail the move as “a move in the right direction,” and given the brand’s recent history of selling new cars (or lack thereof), it’s hard to disagree. These supplier-side deals are the most pragmatic moves Saab has made since being booted from the GM empire.

Due to missing parts, GM, Ford and Chrysler had to shut down plants in the U.S. and Canda, or put them on half shifts for the second day, Reuters reports. Read More >

One of the major losers in the recent “Carpocalypse” was the supplier sector, which lost hundreds of business to bankruptcy as OEMs clamped down on costs and the government refused to stop the bleeding with an effective bailout. Relationships have re-stabilized over recent months,as both the surviving suppliers and OEMs have swung back to the black, but profits aren’t enough to stop the oldest management profit-inflating move in the book: putting the screws on suppliers. Since the US market doesn’t appear on-track to regain its old 16m annual sales level, suppliers and OEMs can’t simply grow together.

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