Japanese cars will be in short supply due to earthquake and tsunami

Car dealers and automobile joint ventures, who are impatiently waiting for imports from Japan, have become anxious upon hearing that Japanese automobile manufacturers have halted the operation of their factories in catastrophe-stricken areas

According to Pham Anh Tuan, a senior executive of Toyota Vietnam, Toyota has shut down two factories in the areas that have suffered most from the earthquake. The workers at the factories in Iwate and Miyagi districts have evacuated to other localities. The manufacturer has also halted operation in its domestic factories for some days, so that staff and domestic suppliers can try to contact their relatives in the earthquake areas.

The representative from Toyota Vietnam said the company is importing some car models from Toyota Japan to sell on the domestic market, such as the Land Cruiser. It also imports car parts from Japan to assemble in Vietnam. Though anticipating that the imports may arrive late for a couple of weeks, Toyota Vietnam said it will try to fulfill the production plan.

“I think automobile joint ventures will suffer less from the earthquake in Japan than car importers,” Tuan said.

Nguyen Duc Nam, Director of Nhat Anh Investment and Import-Export Company, which is running two car dealerships in Hanoi, said that he heard from a Japanese partner that many factories of Nissan, which has suffered severely from the earthquake and tsunami, have halted production. Thousands of Nissan cars, which were to be launched into the market, have been swept away by the tsunami.

“The order we placed with Nissan and Honda before March 11 may be canceled. It is still unclear when we will be able to continue importing cars from Japan,” Nam said. “We have shifted to trade South Korean cars, including Hyundai, Daewoo and Kia”.

Car market still in slump

Though hearing that the Japanese car supply would be short in the time to come due to the earthquake and tsunami, people do not intend to buy cars at this moment. The market is going through a slump.

According to Nam, two Nhat Anh’s dealerships could sell only 10 cars in February, while 50-60 cars were sold each month prior to Tet. Since the beginning of March, sales have been very slow. Nam also complained that the shutting down of the dollar black market has made it more difficult to arrange dollars to buy cars.

Hoang Thuc, a consultancy expert of GM Daewoo Vietnam, said that the gloomy stock market, the efforts by the central bank to eliminate the dollar black market and to prohibit bar gold trading on the free market all have also badly affected the domestic car market. Previously, car dealerships had many customers, who purchased cars after making a fat profit from securities investment deals. However, there are no longer such buyers.

According to Thuc, the average sales of a GM Daewoo in Hanoi have dropped by 50-70 percent compared with the sales in pre-Tet months. In February, the dealership at No 1 Le Trong Tan only sold 20 cars, while it sold 50-60 cars a month in the last months of 2010.

Despite the slow sales, car dealers do not intend to launch sale promotion campaigns to stimulate demand. They are even considering raising sale prices.
“GM Daewoo is considering raising the price of its products, because the input material prices have increased sharply already,” Thuc said.

Meanwhile, Tuan from Toyota Vietnam said Toyota Vietnam has raised the sale price by seven percent for its models, starting from early March 2011.

“The market performance depends on the state’s policies, not on sales promotion campaigns or price reductions,” said Nguyen Dinh Quang, Director of Hoa Binh automobile salon.