FleetWeek

Automakers around the world rely on parts sourced from Japan.  As part of its day-to-day operations, each manufacturer analyzes and monitors its supply chain and parts availability.  Due to the current situation in Japan, manufacturers are under additional pressure to ensure that their supply chains are in order.

For example, Toyota’s purchasing unit presented its suppliers with an exhaustive list of questions that touched on virtually every detail of its supply chain. Toyota’s purchasers wanted detailed reports of sub-supplier names and components, information regarding where each part is made, inventory levels, lists of inventory in transit or in process, target vehicles, part numbers and lead time information.

In GM’s case, the manufacturer developed a crisis team of several hundred employees to work to identify at-risk components and finding replacements. Team members were placed on-site at Japanese supplier plants to assist with restarting production and ensuring GM was allocated its fair share of inventory.

Supply chain management amidst the disaster in Japan is indeed a complicated task.   The crisis has already caused a disruption in the supply of metallic paints used on many vehicles across several manufacturers. A key second-tier paint supplier located in Japan is currently unable to deliver a necessary ingredient used in body paint on many vehicle models. Vehicle manufacturers that used the affected paints are working to make arrangements with alternative paint suppliers, while the Japan-based supplier affected by the disaster is looking to move production to Europe. 

In addition, Automotive News reported that questions surround the future availability of automotive microcontrollers – the electronic “brains” that control millions of vehicles built by major automakers. A vehicle uses from 30 to 100 microchips, which are essential components of parking brakes, engine control units, entertainment systems, stability control, and power steering.

These parts are highly complex and often use-specific, which means they can't easily be re-sourced. Scotiabank, a Canadian financial institution, reported Japan supplies 21% of the world’s semiconductors used in automotive electronics; therefore, Japanese and North American automakers could face production shutdowns if the pipeline runs dry.

Industry experts report the impact on vehicle production will likely linger over the next two-to-six months. Several manufacturers have already taken measures to conserve parts by reducing vehicle output, but are aware that new issues may arise at any time.  Wheels works with each vehicle manufacturer on an ongoing basis to understand supply inventories, and assess the full impact that parts shortages may have on our clients’ vehicles.  We will continue to keep clients informed as the situation unfolds and we obtain additional information from the manufacturers.
 

In a letter sent to its dealers on April 10, Toyota communicated that it expects the ongoing disaster in Japan to impact supply availability for the next few months.

“Inventory will be getting tighter,” the letter said. “The potential exists that supply of new vehicles could be significantly impacted this summer.”

Last week, there were conflicting reports regarding whether production would be shutdown at Toyota’s Georgetown, KY plant.  The manufacturer has confirmed that the facility – which builds the Camry, Avalon and Venza – is scheduled to be down four days: April 15, 18, 22 and 25.  Additionally, Toyota Motor Europe said production at five plants will be halted for several days in late April and early May because of part shortages.

Isuzu Truck recently said that its Fujisawa plant – which manufacturers the Isuzu N-Series product, as well as parts and components for Isuzu’s North America Operation – was halted in March due to the Japan disaster.  All of the plant’s operations remained idle until the end of March, when testing of the production equipment began.  Plant engineers determined at that time that all equipment was functioning properly and that production could resume.

On April 4, production at the Fujisawa plant resumed at a limited capacity, but a timetable for full production at the plant has not yet been announced. Due to parts supply issues and inconsistent levels of electrical power, production will return to normal levels gradually, though Isuzu has already continued production of its NPR gas-powered models earlier this month.  

Wheels Truck Engineers have reported that Isuzu inventory at ports and dealers is scarce, and any dealers that have trucks in stock are selling them at a premium price.

Mitsubishi Fuso Truck has reported no interruptions on production of its new 2012 model. Additionally, Freightliner and International Truck have not reported any production interruptions.

Wheels is in constant communication with the manufacturers, and clients with orders potentially affected by the disaster have received notification from a member of your Wheels Account Team. We will continue to keep clients informed as the situation unfolds and we obtain additional information from the manufacturers.

In addition to the vehicle delivery delays resulting from the disaster in Japan, many auto manufacturers have reported that delays continue due to quality inspection holds, railcar shortages and new truck carrier arrangements. 

Quality Inspection Holds

Due to stringent quality guidelines, many vehicles are held by manufacturers for final inspection and rework (if necessary) before being released from the production plant. Ford and Chrysler have noted that this has caused some buildup of inventory at the assembly plants and outside storage yards, thereby causing some new vehicle shipping delays.

Railcar Shortages

Automakers have reported an industry-wide shortage of railcars across North America. Railcars were put in storage during the economic recession, and the railcar companies have been slow to release railcars back into service.  In addition, severe weather that swept through many parts of North America over the course of the winter continues to affect the availability and movement of railcars throughout the continent.

The limited number of railcars is affecting the delivery of vehicles to dealers.  In addition, manufacturers and body upfitters have reported some delays in returning completed vehicles for shipment. When railcars are unavailable or delayed, upfitted units awaiting shipment may be held up at the body companies due to limited space at assembly plants. 

New Truck Carrier Arrangements

Allied Systems Holdings, Inc., a major transport provider for multiple vehicle manufacturers in the U.S. and Canada, ceased providing services on March 17 as a result of contract disputes. The manufacturers have since secured alternative truck carriers, but communication and logistics systems between the manufacturers and the new providers have been slow to sync up.  In addition, we have noticed a few instances in which the new carriers have either not reported that vehicles have been delivered to the dealers, or have reported delivery before it actually took place. 

Wheels’ Manufacturer Relations and Truck Engineering groups will continue to monitor the shipment of all vehicles, and a member of your Account Team will notify you if any of your vehicles are experiencing delivery delays. 
 

The following vehicle recalls were announced recently:

Ford

Ford has announced that it is expanding its recall of F-150 pickup trucks to include more than 1.2 million additional vehicles.  The move came amid reports of sudden, unexpected air-bag deployments on affected vehicles.

The recall, originally announced in February, covers trucks from the 2004 through 2006 model years, and also includes some 2006 Lincoln Mark LT pickups.

The National Highway Traffic Safety Administration (NHTSA) said it has received reports of about 270 sudden air-bag deployments from suspect F-150s, some of which resulted in injuries. The cause of the Ford air-bag deployments is an electrical short, according to NHTSA.

Ford said it will notify owners starting in May.

GM

GM recently announced that it is recalling about 2,000 2011 Chevrolet Cruze sedans in the U.S. and 400 in Canada due to concerns that the vehicles may contain improperly fastened steering wheels.

The condition has been identified in only one vehicle so far, and there was no crash or injuries associated with the vehicle.

GM has already started notifying drivers of the specifics of the inspection.

Each driver affected by the recalls noted above will receive an official recall notice and instructions directly from the manufacturer, and can have his or her vehicle repaired at a certified dealership free of charge.  Please note that drivers do not need to wait for an official recall notice to arrive before bringing their vehicle in for recall-related repairs.

Additional information on recalls is available at NHTSA’s website at http://www.nhtsa.gov/. Please keep in mind that NHTSA now offers an e-mail notification service through which users can receive automatic recall updates for their vehicles.  Those who wish to register for the notification service can do so here.
 

Mazda announced today that order banks for the following Japan-built 2011 models have been closed, and no additional orders can be accepted in the U.S.:

• CX-7
• CX-9
• Mazda2
• Mazda3
• Mazda5*
• MX-5
• RX-8

*The Mazda5 cut-off applies to the early intro models only.  2012 model year production for the Mazda5 is expected to resume in July.

Mazda has indicated that it will continue to accept orders for the Michigan-built Mazda6 through the end of April.

Please also note that the final order cutoff dates are approaching for the following 2011 models:

U.S.

Chrysler

April 28, 2011 is the final order cutoff date for most Chrysler models (Jeep Patriot, Jeep Compass and Dodge Caliber will reach final order cutoff on May 12).

Ford

April 22, 2011 is the final order cutoff date for the Ford Flex.

GM

April 22, 2011 is the final order cutoff date for the following models:

• Buick Regal
• Cadillac SRX
• Chevrolet Equinox
• GMC Terrain

CANADA

Chrysler

April 29, 2011 is the final order cutoff date for all remaining Chrysler models.

Ford

April 22, 2011 is the final order cutoff date for the Ford Escape.

GM

April 23, 2011 is the final order cutoff date for the following models:

• Chevrolet Silverado 1500 Crew Cab Short Box
• GMC Sierra 1500 Crew Cab Short Box

April 30, 2011 is the final order cutoff date for the following models:

• Buick Regal
• Cadillac Escalade
• Cadillac SRX
• Chevrolet Avalanche
• Chevrolet Express
• Chevrolet Suburban
• Chevrolet Tahoe
• Chevrolet Tahoe Police
• GMC Savana
• GMC Yukon/Yukon XL
• GMC Yukon Denali/Yukon Denali XL

Please keep in mind that all dates listed above are tentative and subject to change, sometimes with very little notice from the manufacturers.  Some manufacturers do not allow “will-try” opportunities for orders they receive after the cutoff date. Therefore, it is extremely important that clients looking to acquire any models approaching cutoff submit orders as soon as possible. We recommend you submit orders to Wheels at least two days prior to the cutoff date to account for processing time.

A complete listing of announced order startup/cutoff dates is available here. Please contact a member of your account team if you have any questions about order cutoffs, production startup dates or your vehicle selector.