Japan quake may hit component supplies to JLR

Posted By: Religare
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Japan quake may hit component supplies to JLR
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Jaguar Land Rover Plc suspects supply disruptions In Japan. The suspicion arose after analyzing the impact of the earthquake and the tsunami that recently hit Japan that resulted in crippling the local auto parts industry.

Jaguar Land Rover Plc, wholly-owned subsidiary of Tata Motors is the latest amongst the companies those have declared the possibilities of the impact that the operation might suffer from, due to the crunch in auto component supplies from Japan.

Japan recently in March was struck by a high-intensity earthquake that also triggered tsunami. Large- scale destruction of several industrialized areas that further housed factories of numerous auto part makers was among the consequence of the disaster.

Now, since manufacturers of certain components that were supposed to be supplied, were based out of the quake-stricken remained affected, the situation further force Honda and Toyota to delay launches and cut production in many countries, including India.

Thus, since the component shortage crisis began, car makers such as Honda, Nissan and even the world"s biggest car maker, Toyota have cut their production by more than a third.

In a disclosure to the United States" Securities and Exchange Commission (SEC), Tata Motors (TML) stated that TML is monitoring the impact of the recent disasters in Japan and have found a risk of supply change disruption that JLR may face in future.

However, it further clarified that JLR is not facing any production shut-downs or delay due to supply at present, though the situation in Japan continues to evolve.

With the two UK-based brands that make luxury sedans and sports utility vehicles being unclear about the kind of components they import from Japan, an e-mail that seeking clarification from the two brands also remained unanswered.

Operating through Britain, JLR procures engines and transmission from American automaker Ford Motor Company. Therefore, in order to decrease it dependency on the developed market, the company has now started procuring parts from developing countries like India, China being the other country on the list. However, local assembly plans have been made in both the countries.

Tata Motors, last year recognizing the surge in demand from the newer markets has decided to alter its original plans of closing one of the three parts based in the West Midlands. In doing so, the company has also secured it 'a landmark pay and condition deal".

After a substantial increase in demands from non-traditional markets such as China and Russia, a 30 per cent increase in wholesale volumes was posted by JLR. The increase was noticed in nine months ended December 2010 at 177,490 units, as against 136,978 units in the same period a year before.

Read more about: automobile, tata motors, jlr
Story first published: Thursday, May 12, 2011, 9:30 [IST]
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