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CCC outlines potential ramifications of Japan disaster on collision repair

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April 20, 2011 — The March 11 earthquake and tsunami in Japan has had a significant impact on vehicle production and could eventually lead to several problems for the automotive insurance and collision repair industries, according to a new report from CCC Information Services.

Lead Industry Analyst Susanna Gotsch, who compiled the report, said vehicle production dropped by an estimated 516,000 units during the first month following the disaster; 260,000 of those vehicles were Toyotas. Toyota also announced that it would keep production levels at 50 percent through June, resulting in further production losses.

Shortages of electronics and resin-based products have also slowed production for Nissan, Honda, Suzuki, Subaru, Toyota and Fuji Heavy Industries. U.S. production has also hit snags because of parts shortages. A recent survey by the Original Equipment Suppliers Association found that 78 percent of respondents identified some portion of their product comes from Japan, Gotsch said.

For the auto insurance and collision repair industries, the problems could lead to the inability to get certain parts, longer part fulfillment times causing longer cycle times, and higher vehicle values that lead to bigger total loss costs, according to Gotsch.

“Everyone is closely watching inventory levels of these at-risk parts, and in some cases slowing new vehicle production to conserve these parts,” she said in the report.

Toyota issued a list of limited-supply parts to dealers soon after the earthquake, the report continued. On the list were nearly 250 parts, including roughly 90 shock absorbers and different types of stereo and electronic equipment. Vehicles such as the Yaris and Lexus LS 400, SC 300 and IS 300, which are made in Japan, are most likely to contain the parts.

Honda, meanwhile, suspended all U.S. orders for its Japan-built models including the Fit, Insight, Civic Hybrid, Acura TSX, Acura RL and a small amount of CR-Vs, Gotsch said. Some of those vehicles might be at risk of interrupted collision part fulfillment, but they only make up about 0.5 percent of the overall appraised vehicle volume for the first quarter of 2011.

Gotsch said the long-term impact on the auto industry is hard to predict, but CCC will continue to monitor the situation closely. Find the full report at cccis.com.
 

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