* Toyota cuts China output, holds sales forecast for now
* Nissan cancelling China overtime, weekend shifts
* Alternative sourcing of parts not easily accomplished
By Chang-Ran Kim, Asia autos correspondent
SHANGHAI, April 20 (Reuters)- Japanese automakers said the
shortage of certain Japan-made parts was starting to affect
production in China, but played down fears that sales would also
be hit as they seek to keep up with the fast-growing but
fiercely competitive market.
Toyota Motor Corp , the world's largest automaker,
said on Wednesday it would cut production in China in half until
June 3 because of the supply disruptions stemming from the March
11 earthquake in Japan.
"In extreme situations, production rates may be adjusted to
30 percent," the company said on its China website, without
providing further details.
Toyota, which also said it would bring forward the summer
break for Chinese plants that produce parts to late April or
early May, has already slashed output in Japan, Europe and the
Announcing further cuts in U.S. production, by 70 percent
from April 26 to June 3, Toyota said on Wednesday it may need to
lower its U.S. sales targets if the disruption extended into the
Despite the supply chain crisis that has paralysed Japanese
auto production since the massive earthquake last month, chief
executives of all three Japanese carmakers made an appearance at
the Shanghai auto show this week, pledging their commitment to
consumers in the world's biggest car market.
Vehicle sales in China jumped 32 percent to 18 million units
last year, securing the country's top spot for the second
consecutive year and sales are expected to double to 40 million
in 2020 by some estimates.
STANDING BY CHINA FORECASTS
Toyota, Nissan Motor Co and Honda Motor Co
all stood by their 2011 sales targets for China that were set
before the March 11 earthquake, even as production cuts and
suspensions look set to lead to lower sales this year in Japan,
North America and Europe.
Nissan's China joint venture, Dongfeng Motor Co, is
cancelling overtime and weekend shifts in China for now and will
slow output during its regular shifts, probably until mid-May,
according to Dongfeng CEO Kimiyasu Nakamura.
But he said Nissan, Japan's No.2 automaker, planned to make
up for lost output in the second half of the business year,
which starts in October, by which time most auto companies
expect the supply chain problem to be resolved.
"We're not standing down on our sales target of 1.15 million
vehicles in China for this year," he told reporters at the
Shanghai auto show.
Honda offered a similar stance, saying it was still aiming
to sell 730,000 cars in China this year. Production cuts
starting from mid-April will not affect customers for now
because Honda had enough cars in inventory to last it through
the end of June or early July, Honda's China chief, Seiji
TOYOTA WARNS OF INDUSTRY-WIDE DISRUPTION
Toyota also stopped short of changing its sales target, but
said the murky outlook for parts supply meant it could not be
100 percent certain of meeting its goal of selling at least
900,000 vehicles in China this year.
"This supply disruption has the potential to affect all
automakers, not just the Japanese," said Masayoshi Hori, an
executive at Toyota's China arm, Toyota Motor (China)
Indeed, the shortages, mainly of electronics, rubber and
resin-based parts from Japan's northeast, have hit production at
many automakers around the world, from Ford Motor Co to
PSA Peugeot Citroen , underscoring the complexity and
deep links connecting the auto industry's supply chain.
Joe Hinrichs, head of Ford's Asia-Pacific and Africa region,
said the U.S. automaker was not facing any disruption in China
so far, but that output elsewhere, in countries such as Thailand
and the Philippines, was affected.
With a vast and growing auto parts industry at automakers'
disposal in China, auto executives at the Shanghai show fielded
many questions about whether they would look for alternative
sources for unavailable parts.
Mitsubishi Motors Corp President Osamu Masuko said
shortages of parts were concentrated on components such as
microcontroller chips like those made by market leader Renesas
Spreading the procurement of such high-tech components to
several suppliers was often not feasible for cost reasons, he
said. Switching to a different source for a component like a
microcontroller chip unit would take about a year from
development to final testing and was not a viable option, he
"In that sense, it's more realistic to pour our efforts into
helping those suppliers, like Renesas, restore its disrupted
production," he said. "There are many ideas to spread the risk,
but the more you think about it, the more elusive a solution
Audi CEO Rupert Stadler agreed and said alternative sourcing
was not a simple task.
"If that were easy, nobody would have any problems. If there
are some missing parts. You cannot switch immediately. You have
to invest for tooling and so on," he said.
He said the German luxury brand, owned by Volkswagen AG
(VOWG_p.DE), had not seen any impact on its production yet.
Still, further out, the effort to spread risk may have to
involve the difficult task of sourcing more components where
vehicles are built, Honda CEO Takanobu Ito said.
"Up to now, there's been a concentration of procurement of
certain components in Japan. Given the situation now, I think
there will be a greater effort to move towards getting parts
locally instead," he said.
(Additional reporting by Helen Massy-Beresford and Ben Klayman;
Editing by Matt Driskill)