Toyota Looks To Regain Production

Toyota Motor Corp expects to be back to full production by the end of the year.  The March 11th earthquake and tsunami that devastated the northeast area of Japan caused significant disruption in the parts distribution system of the world’s largest auto manufacturer.

President Akio Toyoda spoke at a news conference on Friday in Tokyo.  “With this many aftershocks, including one last night, we’ve seen some of the recovery work thrown back to square one many, many times.  In that sense it’s difficult to say what the impact on production volumes or earnings will be.”

Provided there are no further delays, Toyota expects the factories in Japan to increase output in July; they are currently only running at half of their expected output.  Overseas factories have felt even more constriction, sitting on production that is at 40% of expectations.  They should see additional parts supply in August, and worldwide production should return to normal in November or December.

The news conference was called together quite quickly following an announcement from Renesas Electronics Corp, a major microcontroller chip supplier that holds a 40% market share.  The Japanese manufacturer announced they will resume operations at their damaged plant on June 15th, several weeks ahead of their original estimate.  Their halt in production has created a significant bottleneck for car manufacturers.

Considering their importance to parts supply, the announcement by Renesas was a “big factor” in Toyota being able to project its own production, Toyota Executive Vice President Shinichi Sasaki said.

Toyota rushed to make their announcement in response to falling stock prices.  Investors were pleased, sending Japanese auto stocks up slightly.  Toyota, traded as TM on the New York Stock Exchange, was up following the news. Toyota overall ended the day 3.1% higher.

On a large scale, Nissan Motor Co. gained 3.6% and Honda Motor Co was up by 2.3%.

It is possible that auto makers will resume operations much quicker, and Toyota’s estimates could be conservative.

Tetsuro Ii, chief executive officer of Commons Asset Management, believes the rebound will be quicker.  “According to what we’re hearing directly from companies, it looks like the recovery on the ground is faster than people think, and Toyota may well restart production even faster than they stated in this announcement.”

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