The Thai floods pushed Honda's worldwide production down by 260,000 units , or almost 10 per cent of its target figure for this fiscal year.
Honda was forced to reduce output at plants in other regions, including Japan and North America , because the floods also delayed shipments from parts suppliers in Thailand. Taking all the Japanese automakers together, the floods took a 600,000-unit bite out of output.
Inventories held by Honda and others dried up in the key North American market, resulting in the loss of some customers to such firms as South Korea's Hyundai Motor Co.
Japanese automakers' share of the North American market declined by several percentage points from 39 per cent in 2010. Although they have regained some lost ground by increasing production, they face difficult challenges.
For now, the most pressing issue is to prevent a repeat of last year's flood damage.
At Rojana Industrial Park, where Honda's plant is located, a concrete flood wall encircling the site is slated to be completed at the end of August.
And Honda is taking steps on its own, such as moving control panels for production lines higher off the floor.Honda plans to build another factory in Thailand by around 2015 in response to growing demand in the region. It will spread out risk by constructing the plant in an area that experienced little flood damage.
Other automakers are making efforts to strengthen their supply chains. Toyota Motor Corp. is asking parts suppliers to manufacture each product at more than one location, and is striving to use common parts over custom ones.
It wants sufficient stockpiles of electronic components to be kept at all times since finding alternative producers can be difficult.
Toyota aims to cut risk and lower costs by standardizing its specifications for microcontrollers. (Nikkei)