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Toyota cuts Japan output by half until at least 3 June

Toyota cuts Japan output by half until at least 3 June
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First Published: Fri, Apr 15 2011. 04 20 PM IST
Updated: Fri, Apr 15 2011. 04 20 PM IST
Tokyo: Toyota Motor Corp said it will build cars at half the rate of its original plans in Japan at least until 3 June in a move estimated to cost the world’s biggest automaker another 120,000 vehicles in lost production.
Japanese automakers have been hammered by a shortage of hundreds of components after factories in the northeast of the country were damaged by a magnitude-9.0 earthquake on 11 March.
Toyota, Honda Motor Co, Nissan Motor Co and even some overseas rivals such as General Motors Co have had to stop or reduce production since then and investors have punished Japanese auto stocks because a full recovery in manufacturing activities is expected to take months.
“We are not convinced that near-term earnings risk is fully reflected in (Toyota’s) share price,” JPMorgan analyst Kohei Takahashi said on Friday.
He added, however, that because the problem was in supply, not demand, the shares could stage a rebound once production recovers.
Shares in Toyota have lost 11% since 10 March versus the 9.6% drop in Tokyo’s main TOPIX index. Honda has lost 12% and Nissan has shed 11%. Toyota’s shares fell 0.9% Friday.
Many auto analysts have slashed their earnings forecasts for Toyota for the business year that started this month, assuming a global output decline of about 40% in the six months to September.
A survey by Thomson Reuters I/B/E/S shows an average operating profit of ¥287 billion ($3.44 billion) for Toyota in the year to March 2012 from 10 analysts who have revised their estimates after the quake. That is down 64% from an average forecast from 21 analysts a month ago.
Earnings forecasts may be delayed
With little clarity on when the supply chain will be fully restored -- big aftershocks this month have temporarily cut power to factories in the region -- Toyota may delay its announcement of this year’s earnings forecasts, a source with direct knowledge of the matter said.
Toyota usually announces full-year forecasts along with its earnings results, which are due on 11 May for the fourth quarter and the financial year that ended last month.
The Nikkei business daily reported on Friday that Toyota had decided to put off announcing the projections until later in May. Toyota itself said nothing had been decided.
Toyota had said last week it would resume production at all of its domestic factories from 18 April, building about half the planned volumes.
It will suspend output at all 18 group factories that build Toyota and Lexus cars during the factories’ “Golden Week” holidays from 28 April to 9 May -- three days more than planned before the earthquake -- and reopen on 10 May at half the rate.
Before the devastating earthquake, Toyota had been building cars at a pace of about 12,000-13,000 units a day in Japan. At half the planned volumes until 3 June, Toyota would lose another 120,000 units or so after Golden Week.
Toyota has only provided a figure for lost production in Japan through 8 April, of 260,000 units over a 20-day suspension.
Plans beyond 3 June will be determined based on parts availability. Toyota is still having trouble procuring about 150 parts, spokeswoman Shiori Hashimoto said.
A major bottleneck has come from damage to a factory belonging to Renesas Electronics, which sells about 40% of all automotive microcontrollers globally. With Renesas flagging a resumption of a key factory only by July, car production is expected to remain disrupted for some time.
Car makers and other client companies have dispatched hundreds of workers to Renesas to help with the recovery process.
Toyota, like other domestic rivals, has also announced plans to suspend or reduce work outside Japan.
At its North American factories, it will stop the lines for five days this month. In Europe, its five vehicle and engine plants will suspend work between 21 April and 2 May, while in Australia it will produce at half the planned volumes between 9 to 31 May.
Rival Hyundai Motor Co is operating its US plant in Alabama on overtime to meet brisk demand for its Sonata and Elantra sedans.
A Hyundai spokeswoman said the higher production had been planned and were not a result of the disruptions facing Japanese automakers.
“Hyundai isn’t facing any disruptions in the supply of automotive parts from Japan. Less than 1% of our parts (by value) come from Japan and most of our suppliers are located in areas that have not been directly affected by the quake,” Hyundai said.
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First Published: Fri, Apr 15 2011. 04 20 PM IST
More Topics: Toyota | Auto | Carmaker | Japan | Earthquake |