Japan-Quake Impact On Auto Industry Spills Over To Collision Repair

NU Online News Service, April 19, 2:55 p.m. EDT

The March 11 Japan earthquake and tsunami has significantly impacted the country’s automotive industry, and the ripple effects are being felt in the automotive-insurance and collision-repair industries as replacement parts become scarce, a new report says.

CCC Information Services, which provides technology-based claims-management solutions to its clients, says the quake has damaged automotive plants, and ongoing rolling power outages have slowed the manufacturing of machinery, metals and chemicals used in auto-parts production. “Industry analysts estimate that the production of 516,000 vehicles has been lost in the month following the earthquake,” CCC says.

The troubles have spilled over to the collision-repair side, and CCC notes that the most immediate impact the industry can expect is higher market value for vehicles seeing production delays, which will drive up total loss costs.

Other impacts will be “the inability to get certain replacement parts” and “longer fulfillment time of certain replacement parts driving up claim and repair cycle times,” according to CCC.

As an example of issues that can be expected with respect to replacement parts, CCC notes, “Toyota released a list of ‘Japan Limited Supply Parts’ to its dealers soon after the earthquake, letting them know that they would not be filling any orders of these short-inventory parts to replenish dealer stock.” The list included 250 parts.

CCC adds that Honda has suspended U.S. orders of Japan-built models, including the Fit, Insight, CR-Z, Civic Hybrid, Acura TSX, Acura RL and “a small number of CR-Vs.” CCC says some of those vehicles might also potentially be at risk of uninterrupted collision-part fulfillment.

However, the ultimate impact is difficult to assess. CCC states: “An analysis of ‘parts ordered to received average days’ shows no significant change since mid-March for any of the different vehicle makes. Low volumes of those parts that automakers identified as already having limited supply also makes it difficult to assess whether there has been any impact to date.”