Toyota‘s rush to cut costs amid a rising yen is leading them towards a confrontation with parts suppliers, with the automaker demanding that Japanese parts makers slash costs or face being replaced with overseas companies.

Toyota is still reeling from lost production during March’s tsunami and earthquake, and is estimated to lose $443 million for every 1 yen appreciation against the U.S. dollar. Automotive News reports Toyota telling suppliers that it would source parts from emerging markets if Japanese parts companies like Denso and Aisin fail to provide Toyota with agreeable terms.

Nissan CEO Carlos Ghosn warned of severe economic consequences should the Japanese government fail to take adequate action against the yen’s rapid rise.

[Source: Automotive News]

Hyundai and Kia remain unscathed by the parts crunch that is affecting Japanese auto makers, with both companies running their United States-based plants at full capacity and overtime shifts to help meet demand at certain plants.

“We’ve been fortunate,” Robert Burns, a spokesman for the Hyundai plant in Alabama, told Left Lane News. “Our parts development team is closely monitoring all our suppliers, but at this point there’s been no disruption.”

Toyota, Subaru and Honda announced significant cutbacks to their production schedules at North American plants due to parts shortages, and this development has left Hyundai and Kia, already riding a wave of good fortune, in an even better position to capitalize on a currently rebounding market and changing perceptions about both brands.

Mere days after the world’s largest automotive microchip producer struggled to avert a production crisis due to their factory being disabled by the March 11th earthquake in Japan, the second largest producer of automotive microchips is now said to be abandoning their own factory in the area and is looking to add capacity at other plants.

Freescale Semiconductor Inc had prior plans to close their plant, located near the epicenter of the earthquake in Sendai, but decided to forgo repairing the damage sustained by the plant due to its severity. Since the target for the closing was December of this year, Freescale had already begun preparations for closing the plant, including stockpiling parts, but the disruption will still have significant repercussions for the industry. Freescale controls about 20 percent  of the market for microchips. A Chandler, Arizona plant operated by Freescale will help the company fill demand in the interim.

[Source: Automotive News]

While much of the automotive industry is watching what car manufacturers have to say about production shortages in Japan, a key supplier of microchips is transferring production from their battered facility in Japan’s earthquake zone, to seperate facilities in Japan and Singapore – but the move could cause months long delays of crucial components, halting production for a number of vehicles in the process.

Renesas Electronics Corp controls 41 percent of the marketplace, and their chips are used in everything from engine control units, parking brake systems, stability control programs, in-car entertainment and power steering systems. Even one missing part can cause production lines to shut down, and these crucial parts may not ship for as long as 4 months from now. Replacing these components is especially difficult, since they are often designed to work with specific vehicles from the outset. Furthermore, bureaucracy and other administrative processes involved with changing suppliers adds even more time and complexity to the task, wasting precious time.

Automotive News cited the Lexus LS460, a technology intensive vehicle, as one of Renesas’ biggest projects, with 80 percent of its microchips coming from the firm. A shortage of these chips would cripple production of the car, and this phenomenon is not isolated to Toyota alone. While Toyota refused to comment specifically, it is known that they have compiled an inventory, and found 150 crucial parts that did not have a guaranteed supply.

The result of this situation, as well as other manufacturers and suppliers facing similar problems could spell chaos for an industry already prone to feeling the effects of secondary events like rising gas prices or a lack of consumer credit. In the same way that these factors torpedoed the American car industry on the demand side in 2008, these issues could pose a similar problem on the supply side for Japan’s own auto industry.

[Source: Automotive News]

Toyota is the latest automaker to adjust their North American production schedules, with plants idling on April 15, 18, 21, 22, and 25. Toyota’s engine and component factories will follow a similar schedule, while their Georgetown, Kentucky facility will remain open on April 21.

Employees at the plants will have the option of report to work for training programs, use vacation time or take unpaid days off. While Toyota claims that 85 percent of their parts are sourced from North America, the fact is that one missing part, no matter how inconsequential, can halt an entire production line for indefinite periods of time, and this phenomenon is something that will be a common occurrence during these next few months.

Honda plants in North America could be operating at well below capacity as a shortage of parts from Japan threatens to cripple the automaker’s output for as long as 90 days.

Speaking with Automotive News, Honda’s executive Vice-President John Mendel estimated a 60 to 90 day slowdown, with 30 days being an optimistic forecast. Honda has already cut production in half at 5 of its 6 North American plants due to a parts shortage, and 90 percent of Hondas sold in North America are assembled here. While 600 of its 710 suppliers are based in North America, a single missing part can result in a production stoppage.

Mendel highlighted the dire situation in Japan, stating ”In some places, they are still recovering bodies. And even if you have a warehouse full of finished microchips, the roads are ruined, and you are in the radiation zone. What are you going to do?” Honda is estimated to have a 47 day supply of vehicles, and the company is also monitoring parts order by dealers to make sure that hoarding and other shady practices do not occur.

Honda currently imports the Fit and CR-Z from Japan.

[Source: Automotive News]

While Ford and General Motors have both seen plants shut down due to the natural disasters in Japan, and the resulting impact on the country’s auto parts industry, Chrysler‘s vehicle production has remained unaffected by these events.

“We have not experienced any disruptions to regularly scheduled production as a result of the issues in Japan,” said Chrysler spokeswoman Katie Helper.

While some overtime shifts have been cancelled to preserve parts, and a work stoppage occurred at Chrysler’s minivan plant (unrelated to the Japanese disasters), the company claims that everything is on schedule and is not suffering from any disruptions due to the earthquake and tsunami. We’re glad to know that consumers will be able to enjoy an uninterrupted supply of Chrysler 200 cars even if the rest of the industry goes belly-up.

[Source: KickingTires]

Saab has halted production yet again amid another dispute with suppliers. Saab representatives declined to say how long the production stoppage would last, but said that they were in discussions with their suppliers to resolve the matter. Saab’s parent company Spyker said that last week’s production stoppage was related to unpaid bills.

In an interview with Reuters, the head of Sweden’s suppliers organization said that Saab cannot pay its suppliers. Meanwhile, Saab CEO Victor Muller defended his company, stating that they were not on the verge of collapse, but that more stoppages were inevitable. “This is an ongoing thing,” he said. “It will take some time to get everyone back in line properly. We will get it under control.”

[Source: Automotive News]

A shortage of parts means that Subaru‘s Indiana plant will have its production cut in half through the end of the week, and the company will assess the situation on a day to day basis to examine whether a continuation is necessary.

Each of the two shifts will have 4 hours cut from their length. The plant builts the Legacy, Outback and Tribeca models, strong sellers for the brand. Toyota also builds the Camry at the same plant but said that its production was not affected. Subaru was attempting to set a sales record in 2011, after a strong year in 2010 which saw it make substantial gains. But Subaru’s status as a smaller automaker and a smaller supplier base to draw on means that it could be more vulnerable to disruptions than larger automakers like Honda and Toyota.

[Source: Automotive News]

A Japanese factory that makes batteries for the Chevrolet Volt is back online today after being temporarily shut down since the March 11th earthquake.

Hitachi Automotive operates the three plants, one of which produces batteries for the Volt. GM has apparently ordered 100,000 battery packs for the Volt. The other two produce various vehicle components, including Tokico-brand suspension parts, engine computers and fuel systems.

A Hitachi spokesman in Japan told Automotive News that the plants were running at about 70 percent capacity. The plant is expected to reach full capacity by next week.

[Source: Automotive News]