Japanese carmakers press pause on India production

The disruption in parts supplies in the aftermath of the massive earthquake in March in Japan has stalled two of the biggest Japanese carmakers, Toyota and Honda, in India at a time when both were looking to charge ahead with the launch of their small cars.

Last month, Toyota announced a 70% cut in production in India as it was facing parts crunch from Japan, just as it was expanding capacities in a bid to meet demand for its Etios sedan. The firm is now working only three days a week with manufacturing suspended on every Monday and Friday till June 4.

This would result in an estimated loss of production of around 9,000 vehicles and prolong the waiting period for the Etios, something the firm was looking to bring down. In a market spoilt for choices consumers are rarely inclined to wait for a car for too long.

"The supply constraints come at a very inopportune time as we were really geared up and raring to go," said Sandeep Singh, deputy managing director (marketing and sales), Toyota Kirloskar Motor Ltd. "It may be difficult to avoid the inconvenience caused to our customers but we will try to minimise any delivery delays."

Toyota is set to launch its smallest car till date, Etios Liva, in July and though the company has not officially taken a decision whether to postpone the launch, vendor sources said it remained a big possibility.

Arch rival Honda Siel India too announced a 50% cut in production at its Greater Noida plant working only on a single shift operation till the end of July.

The festive season launch date for Honda's small car Brio means it may be able to recover in time.

"We still have sometime to go for the launch and are hopeful that production would normalise in time," said Jnaneswar Sen, senior vice president (marketing and sales), Honda Siel Cars India.

Unlike Toyota, Honda is facing intense competition in its segments especially in the mid size sedan category where the City has been an undisputed leader for well over a decade. The parts' shortage is almost certain to end City's dominance in the segment.