Massive cuts for Toyota, Nissan
POST-QUAKE: THE BATTLE FOR CARS
Massive cuts for Toyota, Nissan
Automotive News | April 18, 2011 – 12:01 am EST
As inventories of Japanese products continue to dry up, Toyota Motor Corp. and Nissan Motor Co. have warned U.S. dealers: Full deliveries from Japan likely won’t arrive until July at the earliest, and perhaps as late as September.
Parts shortages have forced Toyota and Nissan to prepare scenarios in which full production in Japan wouldn’t begin until at least 30 to 90 days after the country’s upcoming holiday break, said people who have been briefed on the situation.
In the best scenario, both automakers will begin full production a month after Japan’s Golden Week holiday ending May 9.
“We are currently planning North American production for next month based on parts availability, so we are not yet ready to project our situation,” said Mike Goss, a spokesman for Toyota Motor Engineering & Manufacturing North America. “We are planning the best we can, but everything depends upon parts. It’s a very fluid situation, changing daily.”
A Nissan spokeswoman declined comment.
In an internal document sent to dealers Friday, April 15, Toyota said it will keep building cars in Japan at half of the original schedule until June 3, which will cost the automaker another 120,000 vehicles in lost production.
Hitting a wall
A decision on Toyota production at Japanese plants after June 6 “will be made at a later date after assessing the situation of its suppliers and other related companies,” the document says.
But Nissan and Toyota have told dealers that if the automakers can’t find alternatives for parts, they might not start full production until 90 days after Golden Week.
Late Friday, Nissan told dealers that it is changing its model mix to give “production priority” to the best-selling models, said a person briefed on the conference call with dealers.
Nissan North America told dealers it is scheduled to receive only 7,500 units in May from Japan and Mexico, down from 40,000 in March. The launch of the Murano CrossCabriolet, scheduled for this month, will be delayed for up to two months.
Dealers are hitting a wall on inventory.
“We’re going to get basically nothing,” said Bob Page, owner of Page Toyota in Southfield, Mich. “Whatever inventory we have, let’s say it carries us 60 days. We’ll be pretty much out of product at the end of May.”
Chip maker Renesas Electronics Corp. continues to be a major concern for all automakers.
Renesas, the world’s largest maker of automotive microcontrollers, controls 41 percent of the global automotive chip market. Renesas said last week it is targeting a July restart at its damaged Naka plant in Japan.
Meanwhile, Toyota and Honda dealers are seeing May vehicle shipments canceled as the automakers grapple with a shrinking pipeline of new vehicles.
Page said Toyota canceled his region’s first shipment of cars to be delivered in May. For the second half of May, Page said his region, which includes Michigan, Ohio, Kentucky and Tennessee, will only see about 400 to 600 new vehicles, compared with the usual 2,000 to 3,000 vehicles units per allocation.
“There’s no doubt that June is going to be a very, very tough month,” he said. “Unless they somehow get a lot of product for May allocation and June arrival, we’re not going to see much activity as far as cars.”
David Wittenmyer, general manager of Jim White Toyota in Toledo, Ohio, said he will get only a small number of Priuses, Venzas and Avalons in late May.
He said he has only 200 vehicles on the lot, in port and in transit, down from the usual 300.
Wittenmyer expects strong sales this month and next, “but I don’t know what happens in June,” he said.
Jay Biggerstaff, general manager at Crown Honda in Pinellas Park, Fla., says vehicle carriers that usually bring 30 units at a time to his dealership now deliver about 10.
He said about 129 vehicles are scheduled to be delivered in May, down from the usual 200 to 300. That, plus the 200 new vehicles he already has, have to last through the end of next month.
“They’re telling me the end of May is when we’re expecting the slowdown,” Biggerstaff said.
Most lots are lean
Some Detroit 3 dealers say they cannot brag about ample inventory because their lots have been relatively lean for months.
“We have enough cars to hit our objectives, but we certainly don’t have enough to aggressively ramp up and jump all over this,” said Tom Bloomfield, general manager at Don Thornton Cadillac in Tulsa, Okla.
Bloomfield has seen no evidence that his import competitors are running short of inventory anyway. He expects that could happen in June or July, but he would be hard-pressed to respond.
“GM is being very conservative on production,” he said. “It’s been tough to maintain adequate inventory.”
But Philadelphia area Chrysler dealer David Kelleher has plenty of vehicles. Although he doesn’t want to highlight problems caused by the quake, he wants to let customers know about his supply. Over the weekend, Kelleher started a TV and radio campaign touting his ample inventory.
“I highlighted the availability I have. I’m really pushing the idea that I have 400 vehicles available — all makes, all models, all colors,” says Kelleher, owner of David Dodge-Chrysler-Jeep-Ram in Glen Mills, Pa. “I’ve been aggressive in ordering, and now I have cars. I’ve been ordering everything they have been tossing me and then some.”
Kelleher believes customers may not realize how much the Japan earthquake might hurt their ability to buy vehicles during the spring and summer selling season.
“This is going to impact the marketplace,” he said. “People are starting to realize the pickings are getting slimmer.
“I do know that people are going to lots and may not be seeing the selection of Camrys they’re used to seeing. I’ve got 50 Chrysler 200s.”