TOYOTA MOTORS said it could take until the end of the year before production has fully recovered to levels seen before the massive earthquake and tsunami on March 11th devastated Japan’s northeast.
In the clearest forecast yet of how long it would take for the Japanese car industry to recover, Toyota said output would start to pick up in July in Japan and about August overseas, with a complete recovery expected in November or December.
Until then, Toyota’s domestic factories will continue to work at volumes equivalent to half of original plans, and at an average 40 per cent outside Japan, the world’s biggest automaker said.
“With this many aftershocks, including one last night, we’ve seen some of the recovery work thrown back to square one many, many times,” company president Akio Toyoda said in Tokyo yesterday. “In that sense it’s difficult to say what the impact on production volumes or earnings will be.”
The news from Toyota came just hours after Japan’s Renesas Electronics, a major supplier of chips to the automotive industry, said it would resume operations at a damaged factory north of Tokyo on June 15th – a few weeks ahead of schedule. While Renesas, like Toyota, stopped short of specifying at what pace production would ramp up, investors cheered its announcement, pushing Japanese auto stocks sharply higher to reverse earlier losses.
The projection from Renesas, which has a 40 per cent market share in automotive microcontroller chips globally, was a “big factor” in Toyota gaining more clarity on its own production, Toyota executive vice-president Shinichi Sasaki said.
Shares in Toyota ended up 3.1 per cent, while Nissan put on 3.6 per cent and Honda gained 2.3 per cent.
Some said Toyota’s forecast could prove conservative in light of recent signs of factories starting to come back on line, a fund manager said.
Japanese automakers have slashed production due to the shortage mostly of electronic and resin-based parts from the magnitude-9.0 earthquake and the resulting tsunami and damage to a major nuclear plant that has disrupted power supplies.
By the end of this month, Toyota said it will have produced 500,000 fewer vehicles globally than it had initially planned, with 400,000 of those in Japan.
Mr Toyoda said Toyota did not yet know which car models would be built at what levels in the ramp-up towards the end of the year. But he said that giving even a rough sense of timing would be a help to dealers, who he said could now give customers at least a vague sense of when they could expect cars to be delivered.
The disruption of parts supply in Japan has also affected car makers overseas such as General Motors and Ford, underscoring the complexity, depth and breadth of the industry’s supply chain and its lean “just-in-time” manufacturing system.
While concentrating production of certain electronic parts was inevitable for suppliers to compete on the global stage, Mr Sasaki said addressing the risk of supply disruption was a task for industry as a whole in one of the world’s most earthquake-prone countries. “We want to consider encouraging our suppliers to set up more production sites overseas,” he said.
Toyota’s manufacturing chief, executive vice-president Atsushi Niimi, said the car maker remained committed to building at least 3 million to 3.2 million vehicles a year in Japan.
