DEVASTATING as the March 11 Japanese earthquake and tsunami were, few realized the magnitude of the aftershock that would rumble through the global auto industry.

Now, a month after the disaster, auto makers across the world are grappling with a shortage of components and spare parts that has shut or reduced plant production.

Just last week, Honda announced it is reducing production at its Swindon car factory in the UK by half, citing parts shortages. Moody's Investors Service warned it might downgrade its credit rating on Toyota because of the financial repercussions of halted car production.

The sudden disruption of the supply chain in the global auto industry is demonstrating that internationalization comes at a price.

The problems aren't restricted to Japan's auto industry. General Motors has been forced to curtail production in the United States and Spain to conserve parts, and Ford has instructed its dealers to stop taking orders for certain car colors because a paint chemicals factory in Japan was damaged in the quake and had to stop production.

About 13 percent of worldwide auto output has been lost due to parts shortages and related problems, according to consulting firm IHS Automotive. The company is forecasting output could drop by as much as 30 percent in the six weeks following the quake.

"Considering the intensive relationship between most enterprises and suppliers, any disruption in the industrial chain of the world's third-largest economy will affect the global economy," consulting firm Protiviti said in a note.

So is a global supply chain a good strategy after all? Some people are starting to wonder.

Global wave

A wave of internationalization emerged in early 1990, when companies aiming for higher profits and improved efficiency began global expansion.

Over the past 20 years, they have set up a vast global supply-chain network that allows parts produced in one nation to be shared in production elsewhere in the world.

The supply chain model was intended to make companies leaner and bring down costs by eliminating the necessity of building up large inventories of parts.

What the model didn't envision was a major disruption to the supply lines in one of the world's biggest economies.

"Industry best practices are to maintain at least a primary and secondary supplier for each critical component," said Thomas McGuckin PwC Asia-Pacific Automotive Leader.

"Auto makers might consider diversifying the location of suppliers to minimize any geographic concentration to the extent possible."

There are hopeful signs, however, that things might not be quite as bad as some analysts had feared. Nissan Motor Co, which has shut production in several areas, said last Friday it would resume domestic production at half capacity from today.

Toyota Motor Corp said last Friday it will resume car production at all its plants in Japan at half capacity from April 18 to 27.

Honda, which suspended output at two plants in Japan, said last month it would also restart production in the country at half capacity from today. Company spokesman Jeffrey Smith earlier said the car maker is also evaluating additional sources for some parts.

The situation in Japan has been compounded by rolling blackouts as the country tries to conserve power in the wake of the nuclear disaster at its crippled Fukushima Dai-ichi power plant. Threats of radiation have slowed some port activity, holding up shipments.

Sun Lijian, deputy dean of School of Economics at Fudan University, said Japanese companies maintained very tight relationships with domestic parts-supplying partners, which created difficulties for other companies trying to break into the supply chain.

"The disaster may prompt the smaller parts makers, which have strong research and development capabilities, to speed up expansion to other countries," said Sun.

"The trend for industrial globalization is inevitable. It needs to be more thorough," he added.

Local content

China, the world's biggest auto market and a significant player in global manufacturing of cars, has largely escaped any impact from the Japanese disaster because current stocks can carry the industry through the end of April.

An increasing percentage of local content in China-made vehicles is also a factor.

But the risk remains that auto output, even here, will be cut in May if the global supply chain remains clogged.

A spokesman for Guangzhou Honda said most of the models built in China, including the Fit and Camry sedans, source over 80 percent of their parts from Chinese suppliers.

"But some second-and-third-tier suppliers import parts from Japan," she said.

Dongfeng Nissan Passenger Vehicle Co, a division of the Japanese auto maker's joint venture with Dongfeng Motor Group, is cutting production by idling plants on weekends through the middle of this month, the Nikkei business daily reported.

The paper said that Nissan expects April output at its China unit to fall 10 percent below target because of supply chain disruptions in Japan.

Consumers in China may conceivably find it more difficult soon to get prompt car deliveries and could find themselves paying higher prices.

"We have suggested consumers place their orders as soon as possible to head off the prospect of higher prices," said a Dongfeng Nissan dealer who declined to be identified.

Some dealers have started to increase inventories in anticipation of higher prices.

Cost rises

The cost of buying imported car models has already risen. The price of the popular Toyota Prado SUV, for example, has gone up by 70,000 yuan (US$10,670).

"It is very likely that US, European and Chinese auto makers will follow the lead of the Japanese and lift vehicle prices," said the dealer. "Price hikes may sweep the whole market this month."

Market research firm J.D. Power and Associates predicts sales of imported cars could drop if parts supply and production problems are not resolved by May or June.

"After June, there may be some impact, but it is expected to be minor unless the situation in Japan does not improve," the company said.

Imported vehicles account for only 5 percent of passenger vehicles sold in China. Of those, about a third are Japanese.

"The only concern is the sourcing of CVT engines, which have key components imported from Japan," said J.D. Power's analyst Jenny Gu. "In addition, CVT transmissions are also imported from Japan. However, production could shift to other engine and transmission options."

For Dongfeng Nissan, its premier Nissan Teana sedan was most severely affected by the earthquake.

Nearly all the parts of the Teana's VQ engine are imported from a Japanese plant only 60 kilometers from the Fukushima Dai-ichi nuclear plant.

Fudan's Sun said spare parts makers in China and South Korea may benefit in the short term if problems persist in Japan.

"But Japanese companies are also keen on protecting their intellectual property rights, which deliver them their core competitiveness," Sun pointed out.