Honda, Nissan accelerate efforts to resume full output

By @ibtimes on

Two of Japan's top automakers are trying to accelerate their efforts to resume full production, but said normal output is unlikely to happen until after the summer due to persistent shortages of parts.

Employees at Nissan Motor Co <7201.T> are working hard to restore quake-hit production at Japan's No.2 automaker to full levels before an October target, although such an early recovery may be hard to achieve, Chief Executive Carlos Ghosn said on Tuesday.

I can tell you that every single Nissan employee is trying to (prove) me wrong when I say October. This is absolutely a sense of motivation from everybody to say we're going to make it happen before October, Ghosn told Reuters in an interview at Nissan's Iwaki engine plant, about 60 km (30 miles) from Tokyo Electric Power's <9501.T> crippled nuclear power station.

But reasonably, I don't think it's going to be before October, he added.

Japanese automakers have slashed production since the magnitude-9.0 earthquake on March 11 due to a shortage of supply from damaged parts makers, a few dozen of which are still seen as being in a critical condition.

Honda Motor <7267.T> joined Nissan on Tuesday in saying the recovery of its parts supply is gathering pace.

We want to move up our schedule for returning to normal, but that depends on the supply of parts, Honda's chief financial officer, Fumihiko Ike, told a small group of reporters. But we are seeing recovery speed up in those supplies.

He also said the company plans to announce its earnings forecast for the current fiscal year before a shareholder meeting on June 23.

Honda has limited access to electronic components, rubber parts and coloring materials, Ike said.

Late last month, Honda said it expected vehicle production to fully return to levels planned before the March 11 earthquake by year-end and to stay at about half those plans through the end of June.

Ike said on Tuesday that this was a worst-case scenario, however, suggesting the situation at the automaker could be better than previously expected.

Reporting full-year earnings in May, rival Toyota Motor Corp <7203.T> painted a more upbeat picture, saying production would gradually pick up from June.

Nissan's Iwaki factory, which builds 2.5 to 3.7-liter engines for the Fuga, Murano, Infiniti M, and other models, marked its return to full production capacity on Tuesday.

Ghosn surprised the market last week with a projection of higher vehicle sales this business year compared with the year ended in March despite a big disruption to production resulting from the disasters that have crippled the supply chain.

Ghosn also told reporters that the Iwaki plant will be working at a faster pace over the next three months than initially planned, to make up for lost production after the quake.

He said the Iwaki plant has fully recovered its production capacity, but it is still not at 100 percent of planned production due to continued parts disruption.

Analysts have said they expect the pace of recovery to be roughly similar at all three car makers.

The catastrophes in Japan came at a particularly inopportune time for Honda, which has just remodeled its popular Civic and had been counting on it to drive sales growth this year.

Indeed, Ike said it would be tough to ensure smooth supplies of the Civic in the United Sates.

(Writing by Matt Driskill; Editing by Anshuman Daga)

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