Chaos in Supply Chain Won’t Last, Top Nissan Supplier Says

(Bloomberg) — Auto-parts maker Jatco Ltd., majority-owned by Nissan Motor Co., said supply-chain issues disrupting the industry won’t last much longer and carmakers will be able to ramp up production again this fiscal year.

“Automakers will definitely recover in the latter half” of the year through March, Jatco Chief Executive Officer Teruaki Nakatsuka said in an interview, noting that current supply-chain challenges caused by the pandemic and global semiconductor shortage are “beyond all of our expectations” and “a bit like force majeure.”  

For now, automakers continue to battle a global chip shortage, with Nissan and the likes of Ford Motor Co., Stellantis NV and General Motors Co. forced to idle some of their factories. IHS Markit forecasts that the semiconductor shortage will extend into next year, a view shared by GM CEO Mary Barra. 

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“Some countries are on track to recovery, there is demand for cars and we are seeing new developments like electrification,” Nakatsuka said. The chip crunch has crippled supply more than past events such as earthquakes, typhoons and floods, he said. 

“The industry has some upside aspects, but the recent supply issue is big,” Nakatsuka said. “All we can do is take basic steps and closely communicate.”

Jatco, in which Mitsubishi Motors Corp. and Suzuki Motor Corp. also own stakes, supplies transmissions to automakers. Some of the parts are procured in Southeast Asian countries such as Malaysia and Thailand, where industrial production has been hit by coronavirus outbreaks. 

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Nissan temporarily stopped production lines at a plant in Tennessee last month due to a shutdown at a Malaysian supplier, and CEO Makoto Uchida has warned that this quarter “will be very difficult.” 

The Japanese automaker’s global output slumped 27% last year to 3.6 million vehicles, while Jatco’s operating profit fell 34% in the fiscal year through March to 18.6 billion yen ($169 million).

Elsewhere, Toyota Motor Corp. has said it is cutting production by 40% due to the Covid-19 and its impact on suppliers. Smaller Japanese automakers have also been hit: Suzuki is halting operations at Japanese factories for several days in September, while Mazda Motor Corp. is suspending work at its plants in Thailand and Mexico.

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