State of the Japanese Auto Industry – Post Disaster

The world cannot certainly forget the raw destruction by Mother Nature in Japan. The disaster was so tremendous that it not only killed tens of thousands of people in Japan but also bought the country’s economy to a halt, auto industry was no exception. The rage of Mother Nature was furiously imposed on Japan with an earthquake followed by a Tsunami bringing the country to almost halt.

During this period every other sector was badly hit and remained shut for most of the period. Moreover the terror of nuclear reaction has worsened the situation. All in all, the country whole economic and political structured was about to collapse. Auto Industry was one of the worst hit sectors as the sector faced scarcity of resources and other problems.

According to Mr. John Mendel (CEO, Honda U.S); it doesn’t take much to bring an assembly unit to halt but even a speedometer needle can do it. It is evident that almost all the auto makers went home after the disaster happened in the country leaving the auto industry in vain. This has forced a drastic cutback in the production by Japanese automakers. The disaster has also lead to the scarcity of many important components which have paved way to the slow growth of auto industry in Japan post the rage of Mother Nature.

The disaster has had the potential to shake the entire auto industry as manufacturers like Nissan, Toyota and many other two and four wheeler companies were left in dismay as to whether they should reduce their dependence on the factories built in earth quake prone region of Japan. Research says that manufacturers were hollowing out of Japan with rapid pace since the disaster hit the country. I personally feel that now every manufacturer will be afraid of Japan because such disasters have become common in the country whether earth quakes or some other rage shown by Mother Nature.

Last month Toyota’s CEO said that the company’s profit from January to March fell 77% and the companies have no other option than to back out. Toyota is not alone in the race of loosing revenues and profits but in fact whole of the two and four wheeler industry fell prey to those disasters. Toyota alone has had shortages of 170000 units as far as production is concerned. Now with this one can imagine the amount of losses Japan’s auto makers had to face during disaster.

Japan’s auto Industry is looking to become stable in terms of production, revenues and profits but the road is far ahead. During the time of disaster exchange rates hovered very rapidly that resulted in loss to the Japanese government. Auto makers in Japan are looking to either export products or to produce them from factories located in the earth quake prone regions. However there are still many difficulties like short supplies, revenues and increased costs which have paved way for difficulties to do business in Japan. All in all, Japan is on the way to recovery and we hope that everything in the country turns out to be fine in the near future. We can only hope and pray fort the country’s fast recovery.