The global automotive industry needs to brace for worsening supply-chain disruption according to IHS Automotive.
Speaking in an online webcast, analyst Michael Robinet said that the auto industry outside of Japan and including non-Japanese OEMs will be impacted by shortages and supply disruption to critical components.
“The worst is yet to come over the next 3-4 weeks,” he said.
Noting that the auto industry is now more globally integrated than ever, Robinet said that Japanese component suppliers are heavily involved with key components.
“Electronic and electric components such as integrated circuits, sensors, semiconductors and LCD screens are emerging as a substantial issue,” he said.
“Petro-chemical feedstock – substantive ethylene and synthetic rubber capacity is off-line – is another substantial issue.”
Powertrain components (gears, clutch packs, solenoids and seals) were also cited as critical components in short supply that would impact production outside Japan.
Robinet estimates that some 13% of global light vehicle production is down as a result of the impact of the crisis in Japan.
He also warned that the ability for companies to re-source is severely limited in the case of highly specialised components.
Turning to the Japanese light vehicle market, Robinet noted that the affected area had high vehicle penetration and that in a parc of 4 million units – hundreds of thousands of vehicles were potentially destroyed.
IHS Automotive’s Japanese light vehicle market forecast for 2011 has been revised down by 430,000 units to 4.3m units (it was just under 4.9m units in 2010). However, Robinet expects replacement demand in the second half of 2012 to lift the Japan light vehicle market over 4.8m units in 2012.
Nariman Behravesh Chief Economist was upbeat on prospects for the US economy. He said in the webcast that “the US economy will be firing on more cylinders in 2011 –the impact from Japan’s disaster and higher oil prices will be limited.”
“The pace of consumer spending has also accelerated, thanks to a gradual improvement in the employment outlook and diminished worries about a double-dip. Bottom line: [economic] growth in the next few years will average 3.0-3.5%.”
However, he also warned that US consumers could “expect shortages and higher prices for Japanese vehicles”.