It’s been a few months since the Japanese earthquake and subsequent tsunami took place but the work to rebuild the infrastructure and the lives of those people affected goes on.

Whilst the effects on the world of commerce and the automotive/fleet markets specifically seem trivial compared to the tragic human cost, the work needed here is also imperative – particularly for an economy that was just starting to show signs of recovery from a prolonged deflationary period and recession. The World Bank has estimated that Japan’s disaster will cost between $100-$235 billion, and take five years to rebuild.

For the carmakers and their component suppliers, this has meant a return to operations as soon as possible – whilst prioritising the safety of workers and their families and supporting the affected areas. However, the huge disruptions suffered have undoubtedly affected production and had a knock-on effect on car sales around the world.

The Japanese carmakers have highlighted how the effects to their global car sales will be minimal. A spokesman for Mazda says: ‘The impact to our specific fleet supply capabilities are minimal, as we have had a well-managed fleet stock process running for some time now and hold stock centrally for future supply to the fleet market. Our current stock position on Mazda6 Diesel derivatives in particular is strong and will provide us with enough stock to supply through any phase of production constraints. Where customers require models/derivatives that are not traditional volume sellers within the Fleet channels we operate, there may be some slight delays in delivering these specific vehicles.’

Meanwhile Mitsubishi says: ‘Production Outside of Japan: Meanwhile, although some of MMC’s models produced abroad are and have been limited by parts procurement, the effect on MMC’s production abroad is negligible and MMC forecasts normal and continuous operation for its plants outside of Japan.’

Moody’s has said that the disruptions to most automakers and parts suppliers will not be extensive in its latest report, saying ‘there will be modest declines in production, but minimal impact on 2011 operating performance. However it said that the Japanese automakers ‘are having a much tougher time because of their higher exposure to the Japanese supply base. We expect the Detroit Big Three and Korean automakers to gain some market share at the expense of Japanese rivals.’

There are also are wider consequences of the disaster that may have longer-term effects on the fleet industry according to some suppliers.

Philippe Noubel, group deputy managing director of Arval, says that the events in Japan have ‘made industry, particularly the automobile industry, aware of the extent to which – unconsciously – it may ultimately be dependent on a very small number of suppliers that are geographically speaking highly concentrated’.

He adds: ‘As far as the car industry is concerned, it appears that the diversification of first-level suppliers, ie major auto equipment manufacturers, does not help to secure supplies when they themselves receive a part of their highly specialised parts from a very small number of suppliers.

‘This is what we perceive today, as most of the difficulties that we experience, considering how hard it is to obtain information, arise from the supply shortage of highly sophisticated electronic components, mainly manufactured in Japan, and unfortunately often in geographical areas that have been affected by the earthquake and tsunami.

‘Consequently, it is evident that this disaster will have repercussions on manufacturers’ capacity to supply their production plants in a normal way.

‘Considering the shock-absorbing effect of stock that existed prior to the disaster, it is certain that the main consequences still lie ahead of us, for instance regarding semiconductors, which come from Japanese production plans that have been severely affected.

‘At the time of writing, the impact on Arval’s vehicle deliveries to its customers is still small. However, we do notice signs that lead us to believe that delivery times, which are already long due to the worldwide upturn in the car market, will become increasingly prolonged. If Japanese electronic part manufacturing plants do not resume their activity soon, it is probable that manufacturers will have to arbitrate their car sale channels.’

He added: ‘If the normal flow of vehicle renewal is disturbed, Arval will more than ever have to provide its customers with expert advice to help them implement bypass solutions. These could take the form of extended vehicle leasing contracts where possible, operations to “pool” available vehicles (allocating a vehicle that becomes available within the customer’s fleet, to a new driver), or offering our customers “relay” vehicles taken from our returned vehicles with low mileage, while waiting for the situation to return to normal.’

Disaster could impact on list prices

Fleet Logistics believes that the disaster caused by the earthquake and tsunami will have a significant impact on the European fleet market including reduced vehicle supply, higher list prices and shortages of components.

As a consequence, international fleet operators will look at another round of austerity measures to control fleet operating costs.

Chief executive Peter Soliman said: ‘We will see a reduction in manufacturing capacity and supply, especially at the indigenous Japanese manufacturers, including Honda, Toyota and Nissan.

‘This will have an increased knock-on effect for those manufacturers that share common platforms, such as Nissan and Renault for example. And the shortage of components will mean that other manufacturers that rely on parts from Japan will also see lost production.

‘I have seen some estimates, including those by Deutsche Bank, predicting that vehicle production in Japan will be cut by up to 3.5m units over the next six months, and it is inevitable that such a shortfall will have a significant impact.

‘We are likely to see manufacturers increase list prices because of the supply shortage, but they will start this in the retail market first where they can react quickest. In the fleet market, long-running fleet contracts will protect the discounts that are in place, at least until the contract comes up for renewal.

‘But wherever they can, manufacturers are likely to look at cutting fleet discounts so that prices in general will rise. However, residual values will also increase due to the supply shortfall, which will be good news for holding costs – at least in the short term.’

Mr Soliman said that he thought that international fleet operators would react in a number of ways, but that all roads would lead to cutting costs.

‘One of the most significant consequences will that large fleets will look at finding ways to take even more cost out of the fleet operation.

‘Cost cutting is likely to follow any price increases with downsizing and reduced vehicle choice likely to be two popular ways of controlling price rises, wrapped up to look like they are green initiatives,’ he concluded.

The impact on the US market

Chris Foster, manager, Vehicle Acquisition Services for Automotive Resources International (ARI), looks at how the events in Japan will impact on the US fleet market.

The aftershocks of Japan’s 9.0 magnitude earthquake are beginning to shake the fleet industry. With major concerns, including parts shortages, manufacturers are finding it difficult to comment on how the disaster will affect production in the upcoming weeks.

Chrysler and Ford Motor Company have restricted dealers from ordering certain paint colours, which were produced at a factory affected in Japan.

General Motors was forced to halt production of the Chevrolet Colorado and GMC Canyon for a week at their Shreveport, Louisiana, plant due to a parts shortage.

Honda Motor Co has anticipated disruptions to North American production due to parts shortages. They have been forced to suspend orders from US dealers for Japanese built models—including the Fit, Insight, CR-Z, Civic Hybrid, Acura TSX and Acura RL.