Even though it's obvious the auto industry is in enormous trouble, the companies and the media have been downplaying the situation as if there are doubts as to whether or not this is going to cause huge problems at major auto makers like Ford (NYSE:F), Toyota (NYSE:TM), GM (NYSE:GM) and Honda (NYSE:HMC).
Some companies have went so far as to say they haven't had any disruptions, as if that is going to continue on. It's a foolish assertion to make because the implication is that business is going on as usual, when in fact huge shortages are looming at the companies, even though the have chosen to focus on paint as the primary missing ingredient, generating the perception major parts are unaffected.
The hope is of course they downplay all of this and maybe Japan will recover quickly enough to make the disruptions minimal. That's very unlikely to happen, and it'll give the appearance that something suddenly and out of control happened, when if fact it was the expected scenario since the disastrous earthquake happened.
So far the only auto company that seems to be totally honest on the near term effects of the earthquake is Volvo, which has admitted they are close to running out of navigation and climate-control components, with the last day they have them being probably today, based on the 10-day supply they said they had on March 21.
Bottom line for investors is they better assume they don't know the entire story and that some vehicle parts are about to be impossible to get.
At this time Japanese auto companies have been the most affected by the shortage, but that is going to quickly spread to other companies, with little hope things will turn around in time to keep it from becoming a disaster to the industry. Shareholders in the sector beware!
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