||After Earthquake, Vehicle Options Will Be Limited
Shortages May Restrict Choices for Months
As earthquake-damaged Japanese automakers and suppliers struggle to increase production, executives say the industry faces a fitful ramp-up that will limit consumer choices for months.
Scattered shortages, such as certain paint pigments, already are doing that. Now, as more vehicles come back online, some trim levels, option packages and colors won't be available.
Andy Palmer, Nissan executive vice president for global product planning, said Nissan already is shifting from the "pull" system, in which cars are built only after receiving a customer's order.
"We've moved toward more of a push type production system, as opposed to the traditional Japanese pull," Palmer said in an interview in Shanghai.
"If we can build a car, we build a car. And then we put that into the distribution network and go try to match it to a customer."
Michael Manley, Chrysler's head of international operations, said some models or option packages likely will be unavailable at times.
"There will be some mix management to help out, to get us out of the situation," Manley said in an interview in New York. "The key is for it not to halt production. Maybe you need to change your mix."
Jim O'Sullivan, CEO of Mazda North America Operations, says it's tough to tell what will be in short supply until automakers try to boost production.
"The issue is not only going to be coming back from production, but what models can you build? Not only what models, but within those models, what trim levels can you build?" O'Sullivan said in New York.
"I could wake up tomorrow morning and say we can't make X, Y or Z."
Developments late last week pointed to recovery in the fourth quarter. Toyota President Akio Toyoda said that while output will begin rebounding this summer, Toyota probably won't get back to full production until November.
At the IHS/National Automobile Dealers Association conference last week, IHS economist George Magliano projected a U.S. production loss of about 500,000 units in the second quarter.
One key supplier, Renesas Electronics Corp., the world's biggest maker of automotive microcontrollers, has bumped up the restart date for its last nonoperational chip plant damaged by the earthquake. Renesas now aims to resume output at its Naka factory on June 15, ahead of its prior target of early July.
Still, Mike Jackson, CEO of AutoNation, said in New York that U.S. dealers probably will be hit by inventory problems of Japan-built vehicles in May or June.
Jackson foresees a 30 to 40 percent reduction in vehicle shipments for a three- to four-month period. Even after that, Jackson sees "equipment and configuration issues," in terms of available options and trims.
But Jackson adds that tight inventories are nothing new to U.S. dealers selling Japanese brands, where the days-supply has often been half that of domestic brands.
Said Jackson: "The Japanese brands are very skilled at dealing with low inventory."
(Source: Automotive News, 04/25/11)
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