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Japan Auto Industry Hit Hard By Quake

It's almost too obvious to write: Japan's auto industry, the third largest in the world (behind China and the  U.S.) has been ravaged by the disasterous earthquake that hit the nation last weekend. But there is a story in just how bad the industry has been hit both in Japan and around the world. 

All seven of Japan's automakers--including the Big 3 of Honda, Nissan and Toyota--were forced to close down their operations earlier this week in the wake of the earthquake and the damage that it created.  And while certain plants are back up and running, the majority of industry operations remained shut down until next week, if not later, according to the Washington Post. And even when they do get back up and running, ongoing issues with parts suppliers and a damaged power-supply infrastructure are expected to cause continued delays stretching for weeks and months. 

As it stands, cars are not rolling off production lines; facilities and cars themselves have been destroyed; parts are not being made or shipped; damaged roads and transportation infrastructure have complicated things further; and the industry is all but frozen.  Estimates indicate that the auto industry is bleeding as much as $150 million per day. 

While you might think that the damage to Japan's automakers would benefit U.S. automakers--U.S. consumers' main choices have long been divided between American and Japanese vehicles, after all--it may have just the opposite effect. Even cars that are built and sold here rely on Japanese parts, and hundreds of auto-part makers were located near the center of the earthquake, cutting off supply channels to U.S. automakers. GM has already been forced to shut down a Louisiana plant that builds two truck models due to parts shortages. More shutdowns are likely. 

While there isn't much good news, if anyone has the wherewithal to overcome such a disaster it just may be Japan's auto industry. Last year, Toyota, the world's largest automaker, reported a $2.25 billion fiscal-year profit, in spite of losing around $2 billion in an infamous string of product recalls.

This next challenge is looking even larger, though. 

Have more questions about how the problems in Japan may affect you as a car buyer? Take a look at Edmunds Q & A presentation on the disaster. 

Here's a further look from the Associated Press: 

Via Washington Post  and CNN