At least three people have been killed so far and scores injured in what authorities have warned could be one of the strongest ever storms to hit the region.
Major automaker Toyota suspended operations in all of its domestic plants due to the storm, while Nissan, Honda and chipmakers Renesas and Tokyo Electron also temporarily halted production at some factories.
Funeral parlour employee Tomoki Maeda was in a hearse when the typhoon struck in Miyazaki city in southern Kyushu, shattering windows and tearing down walls of some buildings.
"I've never experienced such a strong wind or tornado in my 31 years of life," Maeda told Reuters.
Typhoon Shanshan caused damaged to powerlines and housing in Miyazaki city in southern Kyushu. (AP PHOTO)
The typhoon, with gusts of up to 180km/h, was near Unzen city in Nagasaki Prefecture at 2.45pm AEST, moving north at about 15km/h, according to the weather agency.
Around 230,000 households in seven prefectures were without power in the afternoon, according to Kyushu Electric Power Co. The utility earlier said there as no impact at its Sendai Nuclear Power Plant in Satsumasendai city, where the storm made landfall earlier on Thursday.
Chief Cabinet Secretary Yoshimasa Hayashi told a news conference that three people had died and one was missing in incidents related to the typhoon, while the disaster management agency said 45 had suffered injuries.
After hovering over Kyushu for the next few days, the storm is expected to approach the central and eastern regions, including the capital Tokyo, around the weekend, the weather agency said.
More than 5.2 million people have been issued evacuation notices across the country, authorities said.
Madoka Kubo, who runs a hotel in historic city of Hitoyoshi in Kumamoto prefecture, told Reuters that all reservations had been cancelled and her hotel was now being used to house elderly people who had been evacuated from nearby areas.
Airlines, including ANA Holdings and Japan Airlines , have already announced cancellations of nearly 800 flights. Train services have been suspended in many areas of Kyushu while hundreds of bus and ferry services have also been halted, according to the transport ministry.
Typhoon Shanshan is the latest harsh weather system to hit Japan, following Typhoon Ampil, which also led to blackouts and evacuations, earlier this month.
Reuters
