Car makers face production woes as quake-hit Japan suppliers struggle

VOLKSWAGEN, PSAPeugeot Citroen and other European car makers may be forced to halt production in coming weeks as component suppliers in earthquake-ravaged Japan struggle to restart factories.

The recovery to normal production levels may take months and cost the industry “billions of euro” in lost revenue, said Lars Holmqvist, head of the region’s Clepa car suppliers association.

“This will cause disruptions in Europe without question,” said Holmqvist, whose group represents more than 3,000 companies. The effect on the car makers will probably be felt in coming weeks as local supplies of Japanese parts such as semiconductors dry up, he said.

Peugeot, Europe’s second-biggest automaker, is temporarily reducing its workforce to reflect production cuts of as much as 60% resulting from a shortage of Hitachi Ltd diesel engine parts, the company said.

General Motors Co’s Opel unit this week cancelled shifts at German and Spanish plants before finding a new electronic components source in the US.

Some 40 auto-parts makers in Japan remain hampered after the nation’s record earthquake damaged factories and transport routes, said Carlos Ghosn, chief executive of Renault and Japanese partner Nissan Motor Co.

VW, BMW and Daimler have already been struggling with tight parts supplies as they operate plants at high capacity levels to meet record demand.

German car makers have begun inquiring about government support for workers if they halt assembly lines because of missing components from Japan, said Anja Huth, a spokeswoman for the Nuremberg-based Federal Labour Agency.

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