Prolonged Japan crisis may hit India auto firms

The Wall Street Journal (New Delhi) - Automobile and auto parts makers in India said Thursday that if manufacturing disruptions in Japan are prolonged for a few more weeks, their businesses, especially imports of key vehicle parts, could be affected.

The companies, including Maruti Suzuki (India) Ltd., Honda Siel Cars India Ltd., Sona Koyo Steering Systems Ltd. and Motherson Sumi Systems Ltd. are continuing to watch developments in Japan, wrought by a massive earthquake followed by a tsunami and nuclear radiation leakages at a damaged nuclear plant, for any potential impact on their operations.

Several Japanese automobile and auto-parts companies operate in India either through subsidiaries or joint ventures with Indian companies, which import several critical parts as well as fully built vehicles from Japan.

Auto makers such as Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and Suzuki Motor Corp. halted production at their factories in Japan from Monday for several days to cope with planned power outages and adjust to logistical challenges.

Vinnie Mehta, executive director at the Automotive Component Manufacturers Association of India, the local industry lobby group, said the current crisis in Japan is unlikely to have an immediate impact on automobile production in India as most of the local auto makers generally have stocks lasting up to a month.

"There can be an indirect impact after four weeks," he said. "If auto makers don't get the components, they buy directly from Japan, then it can stall manufacturing operations and impact Indian part makers as well."

India remains one of the world's fastest growing markets for automobiles with local car sales growing 30% to 1.79 million cars during April 2010 and February 2011. The country is also base to several auto parts companies who serve local auto makers as well as export to several companies worldwide.

Sandeep Singh, deputy managing director at Toyota Kirloskar Motor Pvt Ltd. said the company is evaluating the impact of the earthquake and tsunami in Japan and will get a clear picture after its parent, Toyota, resumes car production in Japan.

Toyota Kirloskar has already postponed a function scheduled for Tuesday to officially inaugurate its second factory in India due to Friday's earthquake.

Mr. Singh didn't elaborate on the parts that are imported from Japan. The company makes the Etios mid-sized car, the Innova multipurpose vehicle, the Corolla sedan and the Fortuner sports-utility vehicle. It also imports the Land Cruiser and Prado SUV models as well as the Camry sedan.

Earlier Wednesday, Toyota said it will resume production of auto parts at seven factories in Japan that will first supply the domestic market and extend to overseas factories from Monday.

These factories produce engines, hybrid system parts, transmission/engine-related parts, power train-related suspension cast/machined parts, and electric control devices among other parts.

But the Japanese auto maker said it will extend the suspension of its auto assembly production in Japan until Tuesday, resulting in an output loss of 95,000 vehicles since the quake.

A spokeswoman for Honda's India unit said the company imports parts for its Civic and Accord sedans from Japan and that the existing stock is enough to cover production for up to a month.

"There is some stock which we have and some which was shipped earlier should reach us soon," a spokeswoman at Honda Siel said. "After that, we really don't know how this situation will impact us."

Honda Siel imports auto parts from its parent's factories in Japan and Thailand but added that most of the parts are sourced from Thailand. The company deferred an event Thursday to unveil its Brio small car due to the natural disaster in Japan and the subsequent nuclear crisis.

Honda has suspended production in Japan through Sunday.

Separately, Pankaj Mittal, chief operating officer at Motherson Sumi said the company has sufficient inventory of Japanese parts but its operations would be impacted if the current situation extends beyond one to two weeks.

"As of today, we have the materials in place but beyond one-two weeks, we will need to expedite freight of components from Japan," he said, adding all employees and factories of its partner, Sumitomo Wiring Systems Ltd. in Japan are reportedly safe.

Motherson Sumi Systems Ltd.--a joint venture between India's Samvardhana Motherson Group and Sumitomo Wiring Systems--produces car mirrors, wiring harnesses, modules and plastic parts for the global automotive industry.