By Jeff Bennett
Chrysler Group LLC said it is curtailing production this week at two assembly plants as an auto parts shortage resulting from the March 11 earthquake intensifies.
The Auburn Hills, Mich., auto maker has canceled overtime at its Brampton, Ontario, and Toluca, Mexico, plants in response to dwindling parts supplies.
"We have not experienced any disruptions to regularly scheduled production as a result of the issues in Japan," a Chrysler spokeswoman said Wednesday. "We are, however, taking some planned overtime out of our production schedule in an effort to conserve supplier parts that are potentially impacted by the disaster."
The Brampton facility produces the Dodge Challenger, Dodge Charger and 300. The Toluca plant is home to the Dodge Journey and the Fiat 500, which Chrysler is just now introducing in the U.S.
Separately, Moody's Investors Service said Wednesday that it has put Toyota Motor Corp.'s debt rating on review for possible downgrade due to the likely financial impact from the quake. Honda Motor Co. also said it may halt production at a plant in the U.K. next month due to a shortage of made-in-Japan components.
More overtime cutbacks or plant shutdowns are expected in the U.S. as the global automotive industry struggles to recover from the loss of production of some electronic parts and specialty automotive paints following the disaster.
J.P. Morgan analyst Kohei Takahashi said in a research note Tuesday that he doesn't expect Japanese production to recover to pre-quake levels until October or later. Mr. Takahashi forecast a 57% drop in Japanese domestic output production in the calendar second quarter compared to the year-ago period as auto makers take actions to address their lack of parts.
Other analysts have estimate a loss of 500,000 vehicles from Japanese domestic production this year.
Ford Motor /zigman2/quotes/208911460/composite F +0.36% Co. shut a plant in Kentucky and Germany this week in part to conserve parts, while General Motors /zigman2/quotes/205226835/composite GM +0.87% Co. idled a Louisiana plant in March because of parts shortages. Toyota has also warned that some of its U.S. plants may be temporarily shut at some point.
Meanwhile, most U.S. auto makers have switched their plants away from using Xirallic-based paints. The production of Xirallic, an additive that provides a glitter effect in some auto paints, was shut down after the Japan plant where it is produced was damaged. Merck KGaA /zigman2/quotes/200605022/delayed DE:MRK +0.37% said it expects the plant to return to production in June. The plant is the only place in the world where Xirallic is made.
The loss of Xirallic is especially hard on Chrysler's Fiat dealers, who are no longer accepting customer orders for cars painted in its bright red trademark colors known as Rosso Brillante. The Italian auto maker Fiat SpA has management control over Chrysler.
Corrections & Amplifications
An earlier version of this article incorrectly identified Himanshu Patel as the author of the JP Morgan report and said it addressed U.S. output.
Natasha Brereton in Singapore contributed to this article.
Write to Jeff Bennett at firstname.lastname@example.org