The impact and aftermath of the Japanese earthquake on the US car market has been speculated about and analyzed pretty carefully in the past few days. As the second largest car market in the world, what happens in the US could have a significant impact on sales from Japan’s three largest car makers, Toyota Motor Corp. (NYSE: TM), Honda Motor Co., Ltd. (NYSE: HMC), and Nissan Motor Co. Ltd. (OTC: NSANY).

Sales in Japan accounted for 5.5 million units in 2010, with 19 of the top 20 selling models going to these three companies. What are the prospects for new car sales in Japan for 2011?

Production has stopped at many of Japan’s major manufacturers as the facilities are inspected for quake-related damage and electrical power shortages. But that’s not the big problem. The Japanese will sort this out in due time.

The big problem is buyers. Added to the cost of rebuilding the country’s shattered infrastructure, the threat of radioactive material spreading over the country will likely make potential buyers think twice or three times before heading out to browse auto showrooms.

The availability of credit for auto purchases could also be restricted as the country’s banks are called upon to help finance rebuilding efforts. Buying new cars on credit could simply get too expensive.

Many car makers are preparing to re-start operations as soon as next week, according to a report in The Wall Street Journal. Parts suppliers, too, need to get back into production quickly in order to supply parts for the just-in-time manufacturing processes that the auto makers rely on.

Having the auto makers and parts suppliers back on-line quickly will minimize lost sales around the globe. What impact it will have on domestic sales in Japan is much less problematic.

Paul Ausick

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