Asian car industry - sink or swim?

The flooding in Thailand as Bangkok struggles with the rising waters has become a regular feature on night time news bulletins. A report from IFT's North England region highlights the less well known impact of this natural disaster on the Asian car industry.

To the North of Bangkok there are several high technology business parks and a Honda car factory the size of Swindon, all of which have been submerged since early October to a depth of 3 metres.

There are two or three semi-conductor (integrated chips) plants in the affected area (ROHM Group) which have been put out of production by flooding.

As with the earthquake, the three to four week pipeline of finished electronic product is exhausted and car plants are dropping shifts.

In the USA Toyota has dropped 50% and Honda in the UK announced on Monday an 80% reduction in weekly production for the next 8 weeks. Toyota is expected to announce reductions at Derby next week. JLR and Nissan do not seem to be affected.

So once again automotive supply businesses have found themselves  explaining the financial impact of a second natural disaster-related sales drop to their financiers. They potentially lose 2 months' sales. All praise to bankers who choose to be rational and supporrtive.