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Japanese Earthquake Might Impact Flow of Cars, Electronics

By: Craig Wall

March 14, 2011

Chicago - From electronics to cars, Japan is a major producer of many of the things we use in everyday life.

Many of the Japanese automakers have plants in the U.S., so those operations may experience minimal disruption, unless of course key parts have to come from Japan.


But Lexus is an exception; it's made in Japan. So at the McGrath Lexus dealership, they are anxiously waiting to find out the extent of the problem.

"We got some promising information today: the port's open, that two vessels with a few thousand cars each left that were built prior to the earthquake, and the plants don't have damage," Michael McGrath, GM of McGrath Lexus said. "But there are thousands of suppliers that feed that chain, and they're assessing the damage right now."

The potential problem for dealerships like this is inventory. January and February are traditionally slow months for car sales, and things begin ramping up in March. For consumers, that could mean fewer vehicles in the showroom to choose from, or longer waits for cars that have to be special ordered.

But there is the potential for other car makers to have supply problems too.

"What will possibly affect us here is there are suppliers in Japan that also supply companies here, and some of those suppliers were in the hardest hit regions," explained Joe Wiesenfelder, senior editor at Cars.com. "And the way manufacturers work now is they have just in time manufacturing, it's called that's where the parts all arrive just in time to be assembled the car. So if any of those lines of supply are interrupted then assembly stops."

The production of electronics could also be impacted, but there are a couple of factors that bode well for consumers. First, many TV's and computers that are made by companies based in Japan, but they are often assembled in other countries. And second, many of those items have already been shipped for this selling cycle, so the short term disruption may not be that bad.

"Once the people in Japan can get out and see the damage and assess what's going on, that's when we'll get some answers to the questions that everyone's got right now," said Chad Taylor of Chicago-based Abt Electronics.

 

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