Japan supply chain affecting India car market
India is one of the emerging economies in the world, with some projecting that India will overtake both China and the United States to become the world’s largest economy in a few decades.
That lofty projection might be put on hold for now, as both Toyota and Honda have announced that the Japan disaster is affecting their supply chain so severely that they’re cutting back automobile production in India.
India’s fast-growing car sector is experiencing shortages due largely in part to sourcing from Japan. Toyota, in particular, is scaling back its Indian production efforts to 30 percent of its normal production while the global supply chain realigns itself.
Toyota sold 63,837 cars in India in 2010, while Honda sold 61,815.
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As always with the global supply chain, where there are losers, there are winners capable of stepping in and reaping the benefits. With Honda and Toyota struggling to supply the India market, fellow Japanese manufacturer Suzuki is ramping up its efforts to help fill the void.
While both Honda and Toyota rely heavily on imports from Japan to build their Indian cars, Suzuki’s cars are almost entirely locally built. Suzuki’s New Dehli based executives said on Sunday that they expect higher demand for their vehicles, and that they’re ready to meet expectations.
“There has been a sharp spurt in demand in the last few days,” Maruti Suzuki chief general manager Shashank Srivastava told the Business Standard. “We expect further increase in demand from here [on].”
Suzuki, which sold over one million cars in 2010, expects competition from Hyundai and domestic makers Tata Motors and Mahindra & Mahindra.
India’s demand for cars was among the largest in the world in 2010, with sales up 30 percent from 2009.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”