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Wednesday July 18, 6:05 PM

Subaru, Suzuki output hit as quake disrupts supplier

TOKYO, July 18 (Reuters) - Fuji Heavy Industries Ltd. , the maker of Subaru cars, and Suzuki Motor Corp. said they would halt production at some Japanese factories after a car parts supplier was hit by an earthquake on Monday.

Honda Motor Co. said some of its car and motorcycle production could also be stopped next week after factories making piston rings for Riken Corp. were damaged in the quake in northwestern Japan that killed nine people.

Riken is a major supplier of piston rings to Japanese automakers, including the biggest, Toyota Motor Corp. , which said it would review production plans on Thursday.

Riken's shares fell 1.4 percent on Wednesday to 616 yen, taking its losses since the quake to 5.5 percent. The auto subindex fell 1.1 percent on Wednesday.

"There's probably going to be some impact," Honda Chief Executive Takeo Fukui told a news conference on Wednesday.

"We're still investigating, and don't know how big the impact will be."

Suzuki, which makes compact cars and motorcycles, will suspend production at five domestic factories, including two car assembly plants, for three days starting Thursday. That would lead to a production loss of about 10,000 cars and 5,000 motorcycles, a spokesman said.

The automaker will assess later in the week whether production can resume next Monday, he added.

Subaru-brand maker Fuji Heavy will halt production on its minivehicle line from Thursday's second shift until Saturday, the equivalent of 1,500 units.

Monday and Tuesday are planned company holidays and while Fuji Heavy wants to resume production from Wednesday, it will make a decision later this week, spokesman Kenta Matsumoto said.

Other major auto makers including Nissan Motor Co. , Mazda Motor Corp. and Mitsubishi Motors Corp. said they were still making checks with Riken.

Credit Suisse auto analyst Koji Endo said he saw no cause for alarm.

"We have had these kinds of incidents over and over -- whether it's a typhoon or fire or earthquake. It's not that significant," he said, adding he expected automakers would be able to make up for a one-week suspension in about three days of longer, intense production.

Another Honda executive said it might be possible to seek parts from another supplier but added it would take time to test them for compatibility and quality.

Teikoku Piston Ring Co. , another major maker of piston rings, said it had requests from several automakers to supply parts to partly make up for lost production at Riken.

A spokesman said the company had not made a decision yet on whether or how to meet those requests.

NOK Corp. and Nippon Piston Ring Co. said they were asked by several parts and automakers to see if they could substitute as well, if the need arose.

Riken said it was unclear when production would resume at its plants. It has two piston ring plants and nine affiliated plants in and near Kashiwazaki, the city worst hit by Monday's quake.

The company said it had half of the domestic market for piston rings and around 70 percent of the market for seal rings that prevent oil leaks in automatic transmissions and continuously variable transmissions.

Riken said it would take a few days to reposition equipment knocked around by the quake, after which it would need to undertake precision and quality checks. Gas and water supplies had not yet been restored.

 


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