Ford says Japanese auto supplies to GCC may be hit

Toyota's vehicle supplies to GCC may not be disrupted in first quarter, rival auto maker says
Ford says Japanese auto supplies to GCC may be hit
SUPPLY HIT: Japans car manufacturers could see their GCC supply levels hit in Q2 and Q3 of 2011 (Getty Images)
By Gavin Davids
Mon 11 Apr 2011 02:55 PM

The supply of Toyota and other Japanese manufactured vehicles to the GCC may be disrupted in the second and third quarters of this year, the director of sales for Ford Middle East has said.

Following the earthquake and tsunami that devastated the island nation last month, Japan faces an economic fallout that could affect the country’s long term financial stability.

The area that saw the most damage, northern Tohoku, is of concern to analysts, who estimate that the region accounts for approximately eight percent of the country’s gross domestic product. It is also home to a number of the nation’s car manufacturing plants.

Toyota, the Middle East’s bestselling car brand, saw a number of its parts-manufacturing factories destroyed by the earthquake and tsunami, which caused severe shortages and manufacturing shutdowns for it and other automakers.

“Toyota, in my opinion, is not affected yet in the first quarter, because everything is here, everything was produced in Q3 and Q4 [of 2010] and was shipped here,” Hussein Murad, told Arabian Business on the sidelines of an event in Dubai.

In addition, the shutdown of a nuclear power plant damaged by the earthquake saw an electricity supply crunch develop in the area, which is expected to further hamper production efforts.

“They will be [however], all the Japanese manufacturers will be affected later on. You will see this in the second and third quarter [of this year], Murad added.

Noriyuki Matsushima, a Citigroup auto analyst told Reuters that he was assuming a 15 percent drop in Japanese automakers’ global output in the business year that started this month.

In a worst-case scenario, the sector’s combined operating losses in the first half of the year would be the biggest ever, surpassing even those posted at the time by the Lehmann Brothers, he said.

Given the broad-based supply bottleneck following the disaster in Japan, Matsushima estimates that the supply chain would not be restored until autumn.

Despite Japan’s problems, Hussein Murad said that Ford would be looking to build on its successful first quarter results and would look to increase its market share in the GCC over the year.

“We’re not looking at what the competition is doing, or what happened to them. Basically, we just want to out-do ourselves,” he told Arabian Business.

“Our plan is to achieve ten percent of the market share in the GCC. We are very close to achieving this target. We’re very close in Saudi and we’ve exceeded this number in Kuwait,” he added.

On April 10, Ford released its first quarter results for 2011. The American car manufacturer posted a 52 percent increase in sales from within the GCC, with the UAE alone seeing an upswing of 32 percent in sales in the first quarter, triple the industry growth rate of twelve percent.

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