All Japan carmakers to halt some output after quake

TOKYO (Reuters) - All eight of Japan's carmakers plan to stop some domestic production for up to three days to cope with a supply shortage from a key parts maker whose plants were hit by a powerful earthquake on Monday.

Honda Motor Co. and Mazda Motor Corp. joined other Japanese automakers on Thursday in announcing the production suspensions after factories where Riken Corp. makes piston rings and seal rings for transmission parts were damaged by the quake in northwestern Japan that killed 10 people.

Production plans beyond that will depend on updates from Riken, Japan's top supplier of piston rings with more than half the market.

Tokyo-based Riken said late on Thursday it was "doing everything possible" to resume partial production early next week once it finishes inspecting and testing the plants' equipment.

The Nikkei business daily estimated that this week's stoppages, excluding the tally from Honda and Mazda, would amount to roughly 70 percent of domestic auto production capacity. The assemblers plan to make up for lost output in August or later, and analysts said they expect little long-term impact on their business.

"Assuming the shutdown lasts for two days, it could cost the industry about 65,000 units for production and about 100 billion yen ($820 million) in revenue," Macquarie Securities auto analyst Kurt Sanger wrote in a note to clients.

He added that a two- to three-day shutdown would entail little impact on earnings since the automakers would likely offset the lost production through overtime over the course of the quarter.

Carmakers' shares were mixed on Thursday, with Toyota gaining 1 percent, Honda losing 0.5 percent and Nissan rising 0.5 percent.

SPILLOVER EFFECT

Auto assemblers' suspensions are spilling over to their suppliers.

Denso Corp., Japan's top auto parts supplier affiliated with Toyota, said it would reduce domestic production by about 30 to 40 percent over 2- days starting Thursday evening.

Aisin Seiki Co., another core member of the Toyota group, will shut down its eight domestic auto parts factories for a day and a half starting Thursday evening.

Nissan's top supplier, Calsonic Kansei Corp., will halt production in concert with its main customer.

Riken's shares ended up 5.2 percent at 648 yen, recouping most of their losses since the earthquake. Rivals Teikoku Piston Ring Co. and Nippon Piston Ring Co., which have received requests from manufacturers to consider substituting for Riken's parts, climbed by 6.2 percent and 5.3 percent, respectively.

Goldman Sachs auto parts analyst Yuki Kimura said, however, that it would be hasty to assume that the two rival companies will benefit.

"Even if they were asked to provide production assistance, due to the difference in materials it is not clear if they would be able to produce adequate substitutes for automakers," Kimura wrote in a report.

Honda, Japan's second-biggest automaker, will suspend operations at its Suzuka factory on Friday, leading to a loss of 2,000 units.

Mazda will cancel production at its Honsha and Hofu factories on Saturday, work only one shift at Hofu on Monday and shut down for the whole day on Monday at Honsha.

Among others, top-ranked Toyota Motor Corp. is suspending output at all of its 12 domestic car and parts factories for half a day on Thursday and all day on Friday.

Including production halts at the seven affiliates that build Toyota-brand cars, it would lose around 26,000 units of production over that period, a spokesman said on Thursday.

Nissan Motor Co.'s Oppama and Tochigi plants, near Tokyo, will also close on Friday while affiliate Nissan Shatai Co. will suspend operations on Thursday afternoon and all of Friday.

The Oppama factory, which produces Nissan's smaller models, has been operating just one shift instead of the usual two since April due to slack sales.

Japanese Chief Cabinet Secretary Yasuhisa Shiozaki said the government would aim to provide help to smooth the path to a resumption in auto production. He did not elaborate.

"The government hopes to provide assistance so that automakers affected by the earthquake can resume production quickly," he told a news conference on Thursday.

(Additional reporting by Yuzo Saeki)