News / Economy

Japan Earthquake Causing Shortages in Car Parts, Electronics

Automobiles in a Honda dealer's showroom, Los Angeles, California
Automobiles in a Honda dealer's showroom, Los Angeles, California


The earthquake and tsunami in Japan are causing ripple effects throughout the world.  Many factories in Japan that make critical components in electronics and cars have temporarily stopped production, as the nation deals with the disaster and resulting nuclear crisis.  

From transportation, to communications, to entertainment, almost every aspect of modern life around the world may soon feel the impact of the earthquake in Japan.

"We've had many of these plants that manufacture key electronic components that have been damaged. Some of the plants have been damaged directly other plants have been hurt because they can't get electricity," said electronics supply chain analyst Dale Ford.

The nuclear crisis has caused rolling power blackouts.  Ford says the earthquake-damaged Japanese plants produce 25 percent of the world's silicon wafers.  They are used to make semiconductors that go in everyday electronics - from computers and cell phones to digital cameras and game consoles.  Even the anti-lock brake and transmission systems in cars require silicon wafers regardless of where the cars are made.

"We have automotive plants that are shutting down because they can't get an adequate supply of those parts that are needed of producing electronics for going into automobiles," Ford said.

Toyota and Honda in Japan and even a General Motors plant in the U.S. have experienced temporary shutdowns.

Andy Coyle, general manager of Honda of downtown Los Angeles says he anticipates cars and even car parts may soon be in short supply.

"Less supply will probably mean not maybe get the color of their first choice of they'll have to move quickly on it," he said.

Auto industry senior analyst Jessica Caldwell says so far, car prices have not been affected.

"Since the earthquake we haven't seen anything change because of what has happened," she said.  "That's not to say we won't see things in the future."

Caldwell says if the situation in Japan does not improve, consumers could start feeling the effects of the shortage in April.

Honda dealership general manager Andy Coyle says consumers may eventually have to pay more.

"The laws of supply and demand are in place and if there's a shortage or even a perceived shortage there may be some increase in the price or lessening of bargaining power," he said.

On the electronics side, analyst Dale Ford says while consumers may have to wait a bit longer to get a popular product, they may not necessarily be paying more.

"In the economic environment we're in, companies are going to be very reluctant to pass along these price increases to the consumer," he said.

Analysts say many electronic companies and automakers are now trying to find manufacturers in other countries, for the parts they need, but it will take anywhere from days to six months before the plants in Japan can operate at full capacity.

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