Delegates heard that extended April Easter breaks could be announced by some manufacturers as the Japan crisis hits production in Europe in Q2

Delegates heard that 'extended April Easter breaks' could be announced by some manufacturers as the Japan crisis hits production in Europe in Q2

The shortage of crucial components caused by the disaster in Japan will lead to a 250,000-unit loss of European light vehicle production in the second quarter of this year that is then made up in the third quarter, according to JD Power's latest 'base forecast'.

Analyst Arthur Maher told delegates at the JD Power Automotive Forecasting 'Global Outlook Conference' in London last week that vehicle manufacturers are still assessing the size and duration of the supply-chain crisis that is emanating from Japan. Emphasising the uncertainties that follow from manufacturing disruptions that are taking time to 'bubble up' the supply chain to the OEMs, Maher also acknowledged the need for the industry to nevertheless work on reasonable assumptions on the basis of known information.

In Europe, parts disruption as a result of the crisis in Japan is already impacting production plans with downtime announcements at Opel, PSA, Ford, Toyota and Honda. "Clearly, it is not just the Japanese OEMs who are being impacted," Maher said. "But I would emphasise that there are still big uncertainties with the industry still assessing the scale and duration of this crisis - it remains a fluid situation as more information becomes known and manufacturers take decisions on sourcing."

JD Power is assuming in its base forecast that the combined impact will be to remove 250,000 units of European light vehicle output in the second quarter, with the third quarter seeing a compensatory 250,000-unit addition.

Helped by replenishment of stocks after a sharp fall in 2009, European light vehicle output grew by 15.3% to 19.25m units according to JD Power, with the overall level of stocks now 'normalised'. The figure for 2011 is projected at 19.7m units, a gain of some 2.4%.

Maher noted that the European premium brand manufacturers are performing especially well this year. “We have been hearing this year that the likes of Audi, BMW and Mercedes-Benz have been short of some components because of the strength of demand and orders from market such as China,” Maher said. “They have been telling Tier 1 suppliers to produce more.”

JD Power analyst Jonathan Poskitt had earlier told delegates that the German car market is projected to grow by 14% this year to around 3.3m units due to the underlying strength of the German economy (unemployment is now at its lowest since 1992).

However, the picture is much more mixed across the region, with the UK market heading for a 7% decline to 1.89m units and Spain in a 'desperate situation' (car market projected at under 0.9m units this year versus a 2000-2007 average of 1.54m units a year) due to the plight of the Spanish economy (property prices and construction crash, unemployment is 20% versus 6% in Germany). While the French market is 'holding up surprisingly well', Poskitt noted that the Italian car market  looks sluggish.

JD Power forecasts the the West European car market will be virtually flat this year with growth under 1% and 13m unit market size. Looking further ahead, the market is forecast to take eight years to get back to the last peak (2007), only exceeding 14.5m units again in 2015.