In Japan and Korea, the show goes on

TOKYO — The auto industries of Japan and South Korea have remained out of step with the pandemic-beleaguered worlds of North America and Europe in recent days.

As vehicle assembly plants and dealerships shut down in rapid succession from Madrid to Wolfsburg to Detroit, those in Japan and South Korea have been able to continue pumping out and selling cars.

Although cracks began appearing last week, along with mounting calls to lock down social activity, it has been almost business as usual for the two Asian automotive heavyweights in the face of the global health crisis. Factories stayed open, as did much of the rest of society, including bars, restaurants and shopping malls. Springtime revelers in Tokyo were still turning out to drink under the trees for the annual cherry blossom viewing.

But last week, the world’s new economic worries began to prove a contagion of its own here. Soon after the governor of California issued a statewide shelter-at-home order for its 40 million residents, Toyota Motor Corp. last week suspended work at five assembly plants in Japan. Mazda Motor Corp. said it will temporarily stop its two plants here as well, and Nissan and Mitsubishi joined the mix Friday with their own suspensions. Tens of thousands of units will be lost, including production of big export items such as the Lexus NX and Mazda CX-5 crossovers.

Worker safety is always a motivator for Japanese manufacturers. But a bigger part of the calculus is this: What’s the point in churning out the cars if no one is buying them? 

In California alone, where Japanese and Korean brands held a 53.4 percent market share in 2019, according to IHS Automotive, dealers have been advised to close some 1,400 showrooms.

Honda, which is less dependent on exports from Japan to the U.S., and Subaru, which has been struggling with tight inventories, were still inclined to keep their Japanese assembly plants running. But their more export-reliant competitors are under pressure to dial down.

Fragile supply chains are a problem across the automaking globe, but not to the same degree in Japan. Japan’s automakers have mastered supply chain disaster-proofing thanks to the lessons learned from the country’s deadly 2011 earthquake-tsunami-nuclear triple calamity. But unlike an earthquake that hits and lets the industry rebuild, the pandemic has no clear end in sight.

“It’s frightening when you don’t know,” said the local boss of one global supplier in Japan. “But the numbers of orders being requested by customers remain strangely high.”

Toyota cited imploding demand as a top reason for its suspension. Its decision came just days after President Akio Toyoda, acting in his capacity as chairman of the Japan Automobile Manufacturers Association, pledged Japan would do all it could to keep factories humming.

“Production shall be continued on the shop floor,” Toyoda vowed. “Otherwise, we will cause troubles and inconvenience to our customers. So we shall never stop production activities.”

Now, however, Toyota will cut Japan output by 36,000 units through several days of shutdowns in April.

Mazda partly blamed the widespread consumer lockdowns for cutting production by 60,000 units, including reduced output in Mexico and Thailand. But Mazda said it will continue sales operations in Japan and China.

Some analysts expect more shutdowns to follow.

“I’m not surprised they are throttling down production,” said Christopher Richter, lead auto analyst at CLSA Asia-Pacific Markets in Tokyo. “If you have been merrily operating in the U.S. thinking you have 60 days of inventory, guess what? Come April 1, it’s going to be 80, then 120.”

But for the time being, many Asian automakers continued in business.  

While Hyundai suspended operations in the U.S., Brazil, the Czech Republic and India, its plants in South Korea were still running last week. So were Kia's.

Honda’s plants in Japan were operating close to normal last week, with some adjustment for supply chain crimps. Honda’s Japan factories are geared mostly toward feeding domestic demand, and Japanese dealers are still open for business, even though showroom traffic is clearly down.

Likewise, despite closing its U.S. assembly plant, Subaru’s Japanese Gumma factory continued operating almost normally with no major supply kinks.

Nissan Motor Co. had been running Japan plants at a reduced pace, but on Friday, it said it would shut three plants in Japan for large swaths of April. Its Tochigi plant, which makes Infiniti nameplates and other vehicles such as the GT-R will shut down from April 6-22 and on May 1. The Kyushu plant making the Rogue and Rogue Sport for export will suspend night shifts from April 2-30 and all output on May 1. And the Oppama plant that makes small cars such as the Leaf EV and Note will be down on April 3, 13, 24 and May 1. Mitsubishi Motors Corp. likewise suspended a line of minicar production at its Mizushima plant, from March 27-April 10. It announced no changes to output at its main Okazaki plant, where it makes the Outlander PHEV.

“We don’t have any employees testing positive for coronavirus — it’s as simple as that. Business continues,” a Mitsubishi spokesman said. At week’s end, Mitsubishi said it will halt a line that produces Japan-market micro cars.

Indeed, in many corners of Asia, the danger of viral infection seemed less of a worry than the possibility of a financial impact. When a worker at Toyota’s Takaoka assembly plant tested positive for the coronavirus, he was told to stay home and his workstation was disinfected. The production line was quickly switched back on. 

Only when one of his co-workers tested positive two days later did Toyota opt to temporarily close the entire line for a thorough cleaning. 

Toyota is now closing Takaoka for five days on April 3 — but due to slack demand. 

Japan and South Korea have, by many measures, mystified the world by remaining open for business and avoiding the societal and economic standstill now afflicting Europe and North America, where people are hunkered at home under government-ordered self-isolation. 

Neither country has resorted to drastic lockdowns yet. 

As of Friday, the U.S. had 1,246 deaths, South Korea 139 and Japan only 47. 

What is their secret? Some point to South Korea’s efforts at widespread testing to triangulate and isolate pockets of virus outbreak. Others point to Asian cultural habits that may be serving as virus barriers. Asian customs include taking off shoes before entering homes, taking hot baths after work instead of showers in the morning, and especially the tradition of bowing to greet people instead of shaking hands. 

The Japanese also have been long accustomed to wearing masks in public when they are ill as a social courtesy, even if just to shield against coughing when the springtime pollen count is high or pollution levels are bad.