Business disruptions may follow quake

Operations of Japanese auto majors in India likely to be hit

Business disruptions may follow quake

Operations of Japanese auto majors in India likely to be hit

Following the massive earthquake and subsequent tsunami near Japan's northeastern coast of Honshu, Japanese auto companies in India are scrambling to map the likely impact on their local operations.

Vehicles on a damaged road in Yabuki, Japan

Honda, Nissan and Toyota have already issued statements that they have temporarily closed some of their plants in Japan.

Operations at Honda's Saitama factory have been suspended, it has been reported, while Nissan reported that it has closed four of its plants in Tochigi, Kanagawa and Fukushima.

Honda has reported one fatality at Honda R&D in Tochigi prefecture. Nissan's statement claimed that only a few of its workers suffered minor injuries.

"We are still assessing the impact on our operations. Our MD & CEO Shinzo Nakanishi is traveling along with other Japanese executives and hence is not in a position to speak," Puneet Dhawan, Maruti Suzuki's official spokesperson told MiD DAY from New Delhi.

Collateral damage

According to industry sources, Maruti Suzuki imports a sizeable portion of its components as well as completely built units (CBUs) from Japan, despite considerable local manufacturing, and is supposed to be a major gainer from the recently signed Free Trade Agreement between India and Japan.

Therefore, any possible disruption in supplies could affect the company as imported auto components give it a cost advantage over products of other auto companies.

"If, as forecast, more tsunamis take place in the seas of East Asia and South-East Asia, then there is a possibility of disruption in shipping. This might hit supplies of auto components, semi-knocked down kits, completely knocked down kits and CBUs for a while," an auto analyst said.

Incidentally, Toyota Kirloskar Motors is also dependent on auto components as well as CBUs shipped from Japan. Besides, Toyota also plans to import engines and transmission systems for its Etios platform from Thailand or Japan (see box).

"Toyota Motor Company has established a company-wide emergency task force to take initial measures. Employees at manufacturing companies in the Tohoku region, including Toyota Motor, Tohoku, and Central Motor Corporation are evacuating to safe areas," Toyota's official release said, without mentioning any details about any likely impact on its Indian operations.

However, Honda India has not given out any official release so far. "Our Japanese executives are finding it difficult to call their relatives. Some of our Indian employees in the manufacturing section are away in Japan training for our small car project in India. We are trying to get in touch with them," a Honda spokesperson told MiD DAY from New Delhi.

When asked specifically about possible disruptions in the supply chain of auto components and CBUs, a Honda India spokesperson said, "There may be some impact. But, it would be difficult to specify anything at this point. However, we tend to maintain a good stock.

Moreover, at least some of our imported supplies are shipped from our plant in Thailand to JNPT, Mumbai, from where they reach our Delhi plant."u00a0u00a0u00a0