Japan carmakers brace for supply and demand nightmares due to coronavirus
Japan Times -- Feb 08
Clouds are gathering on the horizon for Japanese carmakers, their business outlook put at risk by the new coronavirus from China as it threatens to cripple their supply chains in the country, now a global manufacturing powerhouse.

While automakers have been struggling to assess how the outbreak of the pneumonia-causing virus will affect their production and sales, one thing is clear — they will face significant impacts if the situation continues.

“To be honest, it’s impossible to manufacture cars without China,” said Toshiaki Okada, chief financial officer at Subaru Corp., at a news conference Wednesday.

Many Japanese parts makers run their own production bases in China, so it is expected to take some time for carmakers to grasp how their supplies have been and will be affected, said Arifumi Yoshida, an auto analyst at Citigroup Global Markets Japan Inc.

It will probably be difficult to procure replacement parts in the short term, Yoshida said, but the Great East Japan Earthquake in 2011 prompted Japanese carmakers to diversify supply chains to avoid relying heavily on a single region, he added, noting that in the midterm production is likely to return to normal.

Among Japan’s automakers, Yoshida said Honda Motor Co. was likely to take the biggest hit given that the Tokyo-based firm has plants in Wuhan as well as relying on parts made in China.

Subaru itself does not have production bases in China but its tier-one parts suppliers run factories there, the firm said.

Okada did not disclose the specific numbers but said Subaru uses “quite a lot” of parts from China to assemble cars at its plants in Japan and the United States.

News source: Japan Times
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