Japan earthquake disrupts automotive production

21 March 2022

An earthquake in Japan has caused further disruption to vehicle production and semiconductor supply as the automotive industry continues to struggle with external pressures influencing the automotive market.

The disruption has caused automotive production delays affecting both Toyota and semiconductor supplier Renesas Automotive.

The 7.4 magnitude quake struck the north-east of the country on 16 March, rattling buildings, causing widespread power cuts, and derailing a bullet train. According to reports, the tremor caused 160 injuries with two people losing their lives. The quake affected areas around Fukushima, Miyagi, and Yamagata.

Toyota shuts production lines

Toyota said that due to parts shortages resulting from vehicle-production suppliers affected by the earthquake, operations in some plants around Japan would be adjusted.

‘While prioritising the safety of the people and the recovery of the region, we will continue to work with our relevant suppliers in strengthening our measures against the parts shortage and make every effort to deliver vehicles to our customers as soon as possible,’ the company stated.

In total, 18 of the carmaker’s 28 production lines at 11 of its 14 plants are suspended, and due to restart on 24 March. This will impact a number of vehicles, including variants of the Yaris, the RAV4, the Land Cruiser, and Toyota’s hydrogen fuel-cell model, the Mirai. Additionally, several Lexus models will also be affected by the shutdown.

Semiconductor supply shutdown

Renesas shut down its three closest semiconductor factories to the epicentre of the earthquake. On 18 March, the company restarted production at its factories in Hitachinaka and Takasaki, with both locations expected to be up to pre-earthquake production capacity by 23 March. Its Yonezawa location also restarted on 17 March, with production capacity reached on 20 March.

The company added that it has yet to receive any reports of facility damage that would impact both restart timelines and/or future production of semiconductors.

This will be good news for the automotive industry. Semiconductors have become a valuable commodity in the last two years, with new-vehicle technologies rely heavily on their use. Renesas supplies chips for use in numerous automotive applications, including advanced driver-assistance systems (ADAS), autonomous developments, connected and infotainment technologies, and powertrains.

Supply-chain frailties

While production shutdown for both semiconductors and vehicles may be brief, it will still cause disruption in a market that is already suffering from supply-chain issues.

The COVID-19 pandemic, the semiconductor crisis, and the conflict in Ukraine have highlighted the frailty of links that carmakers created to ensure their global businesses can operate efficiently. Many of these chains are spread across multiple markets, and until a few years ago, worked seamlessly. The Japanese earthquake will ultimately delay car deliveries once again.

However, the industry has been aware of the potential impact that any external problems could cause in the supply chain. Many carmakers have procedures in place to deal with such disruption, including shutdowns of plants or sourcing from other companies. The closing of Toyota’s production lines, while causing the cancellation of thousands of vehicles, is relatively short. The carmaker is using the time to ensure critical components are on-hand to begin manufacturing again as soon as possible.