Component shortages hit Europe car makers

The Wall Street Journal - A shortage of components from suppliers in disaster-hit parts of Japan is beginning to impact manufacturing at some European car makers.

Adam Opel AG, the German unit of U.S. auto giant General Motors Co., Monday said it had cut back output at plants in Germany and Spain while France's PSA Peugeot-Citroën warned production of diesel engines would be affected.

The news follows Volvo Cars' announcement last week that its inventory of some components was down to a week's worth of production and that output could be squeezed unless it was able to replenish its stocks soon. Volvo Cars is a unit of China's Zhejiang Geely Holding Group Co.

Opel Monday cancelled early and late shifts at its plant in Eisenach, Germany, and shut down completely production at its plant in Zaragoza, Spain, due to a shortage in an electronic component sourced from Japan, a company spokesman said.

It was hard to say whether there would be further stoppages, the spokesman said, adding that Opel should be able to make up the production shortfall if there were no further disruptions.

General Motors added its operations in South Korea were to cut back on production to prepare for a possible shortage of parts from Japan. It said last Thursday it planned this week to idle a Shreveport, La., plant that builds small pickup trucks, citing short supplies of a Japan-made part.

PSA Peugeot-Citroën Monday said its production of diesel engines would be disrupted by a shortage of electronic components from a supplier located in Japan's disaster zone. The country March 11 was struck by a massive earthquake and a tsunami that devastated some towns and killed possibly more than 10,000 people.

Shortages of some bulky, low added-value parts won't be felt immediately, however, as they are shipped by sea, with voyages taking between four and six weeks. Lighter, higher added-value parts such as electronic components, often are shipped by air, however, meaning that the logistical supply chain is much shorter.

Peugeot-Citroën, Europe's second-largest automotive group after Volkswagen AG, said the disruption would start affecting its automobile production March 23.

The French company said its supplier's teams currently were working hard to gradually resume production within a week.

"In the meantime, PSA Peugeot Citroën's manufacturing organization will be adjusted to optimize output and effectively serve the needs of dealers and customers. The European assembly plants partly impacted by the disruption will adjust their output accordingly and introduce appropriate work schedules within a week," Peugeot-Citroën said in a statement.

A company spokesman said production of diesel-engined Peugeot and Citroën cars was being wound down because of the impending lack of parts made by Japan's Hitachi Automotive Systems Ltd. The Japanese company has a plant located between Tokyo and the area affected by the earthquake and tsunami.

The parts shortage will affect all of the company's diesel-engined cars, but there would be no disruption to the assembly of light-commercial vans, the spokesman said. "We have some inventories of parts, but they are dwindling," he said.

Peugeot-Citroën hopes Hitachi will be able to start production again soon. "We're hearing positive noises, but there's not a lot of visibility right now," the spokesman said.

Volvo Cars last week said a shortage of components used in infotainment systems, such as audio and navigation, could disrupt production at its factories in Torslanda, Sweden, and in Gent, Belgium, which together produce about 10,000 cars per week.