Thursday, March 31, 2011

Toyota May See Production Diminished by 500,000 Cars because of the Earthquake


The shortage of parts and electricity problems in Japan in the aftermath of the Tohoku earthquake may delay the production of at least 500,000 Toyota vehicles, according to market research company Advanced Research Japan.

The world's largest carmaker may subsequently see its operating profit drop by at least 100 billion yen ($1.2 billion) in the 2010 fiscal year (ending March 31 2011) and up to 200 billion yen in the 2011 fiscal year. Auto analyst Koji Endo says any impact on production destined for export will affect earnings even more. “Hardly any cars will be built in April and a very low level of production will continue from May,” Endo was quoted as saying by Bloomberg.

Toyota said it lost 140,000 units of production from March 14 to March 26, when it closed all 18 plants in Japan due to a shortage of electronic parts, rubber and plastics. The carmaker resumed building three models at two factories on March 24, with the company giving priority to hybrid vehicles, including the Prius best-seller. Toyota was able to resume hybrid production using remaining inventory and parts from suppliers who have recovered.

Starting this summer, Japanese manufacturers will see their power supply cut by around 15 percent, as the earthquake knocked out generators, with production to be further affected. Toyota built 3.28 million cars in Japan in 2010.

The other two major Japanese carmakers also admitted production delays, with Nissan saying it couldn't build 55,000 units this month, while Honda estimated a loss of 46,600 units between March 14 and April 3.

By Dan Mihalascu

Source: Bloomberg


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