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Toyota, Nissan Say China Plants Have Adequate Parts Supply

Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. said car production in China was unaffected after the strongest earthquake on record in Japan forced parts makers to halt plants.

Output at Toyota’s China ventures is continuing normally, Liu Peng, a Beijing-based spokesman, said today without elaborating. Plants operated by Nissan have so far suffered “no impact” since last week’s temblor in Japan, spokesman Akihiro Nakanishi said. Honda’s Chinese factories have adequate parts supplies to ensure production until the end of the week, said Takayuki Fujii, a Beijing-based spokesman.

Japan’s three largest automakers all closed plants after the magnitude-9.0 earthquake and an ensuing tsunami struck the nation on March 11. Japanese automakers accounted for about 20 percent of deliveries in the world’s largest car market last year, according to figures from the China Association of Automobile Manufacturers.

Nissan buys about 90 percent of auto parts used at its China plants locally, Nakanishi said from Guangzhou, where Nissan has a factory. The Yokohama-based company’s factories in China can operate without disruption until the end of the month, he said.

“Given that most suppliers are located at or near the automakers’ car assembly plants, resumption of car assembly would signal the resumption of supplier operations,” said Steve Man, analyst at Samsung Securities (Asia) Ltd. in Hong Kong, adding that this is a positive sign. He estimates current supply of inventories to sustain production for about two months.

China Inventory

Shares in Toyota, the world’s biggest car company, fell 2.2 percent to close at 3,270 yen in Tokyo. Toyota, Nissan and Honda shares have all lost about 10 percent since March 10, the day before the earthquake off the coast of Sendai, northern Japan. Honda declined 1.1 percent, while Nissan slipped 1.1 percent.

Guangzhou Automobile Group Co., partner of Honda and Toyota, has as many as three months of the core parts needed for production, CLSA Asia Pacific Beijing-based analyst Scott Laprise wrote in a note to clients, citing the company.

“Our past experience tells us the Japanese joint ventures in China keep little inventory to improve overall efficiency,” Laprise said. “This changed last year after the Honda parts factory went on strike.”

Honda’s Chinese venture with Dongfeng Motor Group Co. has enough inventory to continue production for at least a month, Citigroup Inc.’s Hong Kong-based analyst Gerwin Ho wrote in a report yesterday.

China Dealerships

Guangzhou Auto and Dongfeng Motor’s dealerships on the mainland also have about a month’s worth of car inventory, Nomura International (HK) analysts led by Yankun Hou said in a report yesterday. If 70 percent of Japanese domestic capacity could resume production within one month, sales of their China joint venture would not be affected, the report said.

While Toyota reopened seven factories in Aichi, central Japan, today, it has halted auto assembly and closed most other parts plants until March 22, the company said yesterday. Honda has said all its plants in Japan will be closed until March 20.

Nissan, Japan’s second biggest carmaker, and an affiliate today reopened one car-assembly plant in Kyushu, southern Japan and another tomorrow, it said. Two Nissan factories will remain closed until March 20, while another will operate partially. No decision has been made on reopening a sixth plant, Nissan said.

Toyota sold 846,000 vehicles in China in 2010, an increase of 19 percent, it said Jan. 5. China became Nissan’s second largest market by sales last year, overtaking the U.S., as the carmaker boosted sales 36 percent to 1.023 million vehicles.

Honda’s sales on the mainland gained 12 percent last year to 646,631 units. The automaker has said it expects deliveries to increase 10 percent this year.

Luo, a dealer for Nissan’s Infiniti luxury sedan in Zhengzhou, said the earthquake posed no interruption to its business, and the dealership’s current inventory would be able to last them till the end of the month.

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