Shortage of electronics and resin-based parts amidst the March 11 earthquake and tsunami took its toll on Japan’s automobile industry while the damage to the Fukushima nuclear plant interrupted power supplies.

After holding the top spot as the top car manufacturer since 2008, Toyota Motors will most likely give up that position to General Motors and probably drop to third behind Volkswagen. It reduced its local production to just 129,491 vehicles in March Alone. Koji Endo, Managing Director of Advanced Research Japan, said that GM is projected to produce more than 8 million units with Volkswagen set to produce 7 million.

In 2010, Toyota rolled out 8.42 million units compared to 8.39 million for GM. It was projected to sell 6.5 million units this year. Toyota spokesman Paul Nolasco said that there sales for March was the worst on record since 1988. After the earthquake, eleven analysts revised their projections to 281.9 billion yens until March 2012, down 65 percent from the 804 billion pre-earthquake predictions from 21 analysts.

The other players in the Japanese car industry also reported drops in their local production. Nissan, the second largest Japanese car maker, produced only 47,590 vehicles, a drop of 52.4 percent. Honda, the third largest Japanese car maker, produced only 34,754 units, a 62.9 percent decrease in March alone. It said that output would be at 50 percent capacity until the end of June. Honda revealed that it would take until the end of the year for production to normalize.

Expected to benefit from the extended slump in Japanese production would be Korean car makers Hyundai and Kia whose shares went up to a record high. Shares of Japanese car makers were slightly weaker with Toyota closing down by 0.6 percent, Honda at 1.3 percent, and Nissan 1.8 percent.

The impact in the Japanese car industry has been echoed in overseas production as well. Factories in Europe, North America, and Asia have scaled down its production due to shortage of parts.

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