Tag Archive | "Toyota Motor Corp."

Auto Production Faces Bigger Hit After Japan Quake


Toyota Motor Co. may slip to No. 3 in the automaker production rankings behind General Motors and Volkswagen due to Japan’s earthquake and nuclear crisis, which slashed local output by almost two-thirds in March alone.

A shortage of parts in the wake of the March 11 earthquake and tsunami has savaged Japan’s auto sector supply chain, while damage to a major nuclear plant has disrupted power supplies.

Investors expecting overseas rivals to benefit from a prolonged slump in Japanese output pushed up shares in South Korea’s Hyundai Motors and associate Kia Motors to record highs on Monday, reported Reuters.

In Japan and North America, Hyundai, GM and Ford Motor Co stand to be the biggest winners, analysts said, because of Hyundai’s established small-car lineup and GM and Ford’s growing and improved small-car lineups.

Honda Motor Co, Japan’s No. 3 automaker and fourth-biggest in the U.S. market, said on Monday it would take until the end of the year before production returned to normal, echoing recent comments from Toyota.

Honda, which reported domestic production shrank 63 percent in March, said output would be at 50 percent of its original plans until the end of June.

Domestic production at Toyota, the world’s largest automaker, plummeted 63 percent in March, while Japan’s No. 2 Nissan Motor Co said its corresponding figure fell 52 percent. Nissan is No. 6 in the U.S. market.

On Monday, Ford said it would idle plants in Taiwan, China, and South Africa this week, pushing up closings it had scheduled for later in the year. Two weeks ago, the company signaled it would likely shut plants in Asia starting in late April and going into May.

Ford did not say whether the lost production would be made up later, or if it would adjust its global output forecast for 2011.

Toyota is almost certain to lose its top spot in global auto production, a title it attained in 2008 by overtaking General Motors. GM looks like it will slide into the top spot and Toyota could fall behind Volkswagen, which is currently No. 3, said Koji Endo, managing director of Advanced Research Japan in Tokyo.

Toyota, which sold 8.42 million vehicles last year versus GM’s 8.39 million, was on track to post sales of around 6.5 million units this year, Endo said. Other analysts, lacking clear guidance from Toyota, expect sales of roughly 6.3 million to 7 million units.

“Most likely GM will produce 8 million-plus and Volkswagen will produce around 7 million, so most likely Toyota will be third, GM will be first,” Endo said.

Volkswagen has a stated goal of taking Toyota’s No. 1 spot and expects its 2011 sales to top the record 7.14 million vehicles it sold last year.

Toyota played down the prospect of losing its top ranking.

“When Toyota became No. 1 there were no champagne corks going off here,” said Toyota spokesman Paul Nolasco. The March sales were the worst since records began in 1988, he added.

Standard & Poor’s later cut its outlook on six major Japanese automakers and suppliers to “negative” from “stable.”

Johnson Controls Inc, one of the world’s largest auto suppliers, on Monday projected a drop in third-quarter revenue of $500 million due to the falloff on Japanese auto production.

Production has also been disrupted outside Japan, as factories in Europe, North America and the rest of Asia scale back due to parts shortages.

However, the impact on production is minor relative to the halving of Japan’s automotive production during the calendar second quarter seen by some analysts, including Brian Johnson of Barclays Capital.

Johnson said he expects Japanese auto output to drop by 50 percent in the second quarter, to be near normal in the third quarter, and produce more than normal in the fourth quarter.

Japanese automakers have not forecast what impact the production cuts will have on earnings, but analysts have been slashing forecasts since the disaster.

For Toyota, 11 analysts who revised their forecasts after the earthquake calculated an average operating profit of 281.9 billion yen ($3.44 billion) for the year to March 2012.

That is down 65 percent from the consensus of 804 billion yen from 21 analysts before the quake, according to Thomson Reuters I/B/E/S. Toyota will announce its results on May 11, but it is not certain if it will provide its own forecast.

“In overseas markets, consumers have choices and (non-Japanese makers) probably will take some share, but I think it is an open question if those will be sustainable or temporary share changes – my guess is that they will tend to be temporary,” said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets in Tokyo.

Shares in major Japanese automakers were weaker on Monday, with Toyota ending down 0.6 percent, Honda down 1.3 percent and Nissan 1.8 percent lower. The main Nikkei index closed off 0.1 percent.

Tokyo’s transport equipment sub-index has bounced about 14 percent from its post-quake low, but is still more than 6 percent below where it was before the disaster struck.

In contrast, Hyundai has surged 30 percent over the same period on expectations it will benefit from the woes of its Japanese rivals. Hyundai shares jumped 5.6 percent to a record high on Monday, while Kia shares also hit a record, up 3.2 percent.

“These are good times for South Korean car makers. They will gain market share, raise utilization rates,” said Park Jong-min, a fund manager at ING Investment Management in Seoul. “They will also reduce incentives, which will help cut costs.”

Hyundai and Kia were No. 5 by combined global sales last year.

The disaster has been a major setback for the world’s third-largest economy, with exports falling faster than forecast in March and industrial output data due on Thursday expected to show a record decline. Some economists expect industrial production to fall as much as a quarter, month on month, in March.

The fall in Japanese vehicle output has fed through to major steel suppliers, weighing on profits and prospects for companies, including JFE Holdings.

Many companies are expected to refrain from giving 2012 earnings guidance during the current Japan fourth quarter reporting season and those that do are expected to paint a bleak picture.

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Toyota Sees At Least 6 Months Before Normal Production


TOKYO – Toyota Motor Corp., hit hard by last month’s Japanese earthquake, says it will take at least until November for production to return to normal – overseas and at home – but that factory suspensions have bottomed out and output will start rebounding this summer.

The announcement makes the world’s biggest automaker the first to publicly forecast a return to pre-quake levels and offers a peek at how long it may take other Japan carmakers to recover, reported Automotive News.

Toyota President Akio Toyoda said today he outlined the timeframe – despite its being long-range and vague – to help dealers with planning. Until now, they have been hamstrung in pitching their products and handling customers because of looming uncertainty about inventories.

“By telling dealers the timing of the recovery, they can have a better conversation with their customers,” Toyoda said at a news conference. “Dealers right now cannot talk to their customers about delivery timing. They can’t talk about specifics. Sales people are having a difficult time.”

Toyota expects output overseas and in Japan to return to pre-quake levels in November or December. In Japan, output that currently hovers around 50 percent of the normal rate will start increasing in July as the final kinks in the supply chain get worked out.

Factories in other countries will begin ramping up production from current levels in August.

Atsushi Niimi, executive vice president for global manufacturing, said U.S. production levels – expected to be around 30 percent normal – will inch along at that rate until August.

“I think that’s the lowest production will drop,” Niimi said.

Toyota recently has announced several production cuts for plants in the United States. Assembly plants there will operate for only three days a week. And when they are running, they will work at only half the normal pace. That brings total output to about 30 percent of pre-quake levels because the plants will lie completely idle on both Mondays and Fridays.

Like other Japanese automakers, Toyota has been suspending production amid global parts shortages triggered by the March 11 earthquake that hammered Japan’s supply chain. Toyota also announced this week that it would slash utilization of its plants in China to as low as 30 percent.

It has made other production cuts in Europe.

Toyoda stressed that his comeback plan is still very fragile.

“Just last night in the area around Tokyo, we had another aftershock,” Toyoda said. “Because of such things, it can reverse the progress being made. So it is difficult to read what will happen.”

He wouldn’t speculate on how it would impact earnings or about how many units of production would be lost globally, with plants limping along for months to come.

Through the end of April alone, Toyota expects to lose 500,000 units globally.

Shinichi Sasaki, executive vice president in charge of purchasing, said models that share many commonized parts will be first returning to normal production.

Toyoda said the company is considering support to its dealers as sales sag. In Japan, that will entail help in seeking public support or in attracting after-service repair work.

He didn’t outline any plans for dealers overseas. Spokesman Masami Doi said actions to support U.S. dealers would be handled through its local sales arm, Toyota Motor Sales U.S.A.

“The best thing we can do for those dealers is supply cars as quickly as possible,” Toyoda said.

Toyota will also tweak procurement to better guard against supply shocks, Sasaki said. While it will stick with a just-in-time approach of keeping low parts inventories, it will spread risk better.

That will include moving more parts production overseas – especially lower tier suppliers, he said. That way, U.S. parts plants won’t be as reliant on imported subcomponents.

“We have to consider being able to procure the entire part locally,” Sasaki said. “We would like to ask our suppliers to consider setting up shop overseas.”

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Toyota Recalls 308,000 Vehicles To Fix Airbags


Toyota Motor Corp. says it will recall certain 2007 and 2008 RAV4 and 2008 Highlander SUVs sold in the U.S. because of a problem that could cause unwanted airbag deployments.

The flaw stems from the vehicles’ roll-sensing airbag systems that are designed to protect occupants in a rollover crash, reported The Wall Street Journal. Toyota says the roll sensing curtain shield airbag system has two sensors that detect the vehicle’s roll angle. If one of these sensors malfunctions, the airbag warning light illuminates and the roll-detection system stops working. In such cases the airbag will still activate in a side-impact collision, Toyota says.

More troubling is the possibility of the bags deploying inadvertently, which could happen if both sensors fail “nearly simultaneously” after the initial airbag system check.

The company says no other Lexus or Toyota models are involved in this recall and this particular problem involves only vehicles sold in North America. Vehicles in other markets don’t have the roll-sensing airbag system.

Under the recall, which affects about 214,000 RAV4s and 94,000 Highlanders, Toyota dealers will replace the sensor assembly free of charge. The company says the recall will begin next month.

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Toyota Tells U.S. Dealers To Brace For Tighter Auto Supply


Toyota Motor Corp. told U.S. dealers that assembly disruptions triggered by last month’s record earthquake and tsunami in Japan may thin supplies of vehicles into the third quarter.

The world’s largest automaker will build vehicles at “significantly reduced levels,” Bob Carter, group vice president of U.S. sales, said in a memorandum to dealers. While Toyota, Honda Motor Co. and Nissan Motor Co. reported mostly minor damage at Japanese plants from the March 11 disaster, all three cut output in Japan and abroad as they rebuild stockpiles of parts from suppliers whose operations were disrupted, reported Bloomberg.

Toyota, which estimates that North America generates about 60 percent of its operating profit, said last week it would suspend production at auto, engine and parts plants in the region for five days this month because of a shortage of Japan- made components. The company plans to restart all plants in Japan by April 18 at half of their capacity, it said last week.

“What we don’t know are vehicle production levels for May through July,” Carter said in the memo. “The potential exists that supply of new vehicles could be significantly impacted this summer.”

Toyota probably has a sufficient supply of vehicles until the middle of May, said Jesse Toprak, an industry analyst at TrueCar.com, a website based in Santa Monica, California, that tracks auto market trends.

“Beyond that, cars made solely in Japan and that get exceptionally high mileage – the Prius, for example – will have very limited availability,” Toprak said.

The company said today production at five European plants will stop for several days late this month and in early May because of parts shortages.

Ford Motor Co. may also halt production of some models in Asia starting in the last week of April, because of parts shortages caused by last month’s 9-magnitude earthquake, the company said in a regulatory filing yesterday. The second- largest U.S. automaker closed a factory in Kentucky and Belgium last week due to earthquake-related parts shortages.

The possible shutdown of Asian plants wouldn’t have a “material impact” on overall results, Dearborn, Michigan-based Ford said in the filing.

Toyota’s American depositary receipts, equal to two ordinary shares, rose 70 cents to $77.20 at 4:15 p.m. in New York Stock Exchange composite trading. Ford rose 5 cents to $14.91.

Toyota may lose production of 35,000 cars and light trucks at North American factories between March 11 and April 25 because of production cutbacks, Shiori Hashimoto, a company spokeswoman in Tokyo, said yesterday. Mike Goss, a spokesman for Toyota’s manufacturing unit in Erlanger, Kentucky, declined to elaborate on assembly plans beyond the April 8 announcement.

“Output reduction in Japan and overseas will most likely continue until September,” said Kohei Takahashi, an analyst at JPMorgan Chase & Co. in Tokyo. “Demand in the overseas markets is greater than that in the domestic market, so automakers will prioritize resuming output at their overseas plants.”

A decision on whether North American production cuts need to be extended will be made later this month, Carter said, without elaborating.

Following the temporary shutdowns in Europe, output at plants there will be reduced for the rest of May, Toyota said in an e-mailed statement today. Auto-assembly plants affected are in Burnaston, England; Adapazari, Turkey; and Onnaing, France, according to the statement. Engine plants in Jelcz-Laskowice, Poland; and Deeside, Wales, will also be shut.

The company said it will continue to evaluate its supply chain and make plans about production beyond May.

Toyota has inventory of more than 300,000 new vehicles for sale in the U.S., more than after the U.S. government’s “cash for clunkers” incentive program in 2009, Carter said in the memo.

“We remain confident about April sales,” he said.

Along with reduced vehicle inventory, Toyota also expects some paint colors to be in limited supply because of damage sustained by a chemical maker in Japan, Carter said.

Toyota’s distribution department will work with the North American engineering and production unit “to change exterior colors on affected vehicles to match paint supply and keep the production lines moving,” Carter said, without elaborating.

Citigroup Inc. analyst Noriyuki Matsushima downgraded Japan’s automobile sector to “sell” last week, citing the possibility that output cuts will last beyond April. The report also said the industry hasn’t addressed the effect on earnings from possible electricity shortages stemming from damage to a nuclear-power plant in Fukushima, Japan.

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Feds Investigate Toyota Air Bag Incident


DETROIT – The National Highway Traffic Safety Administration has agreed to review a petition claiming the frontal airbag of a 2008 Toyota Corolla failed to deploy during a crash.

The agency said in a statement on its website that it received a petition that “the frontal air bags in their MY 2008 Corolla failed to deploy during a 55-mph frontal impact with a large animal (a deer). During this crash, neither the driver nor front passenger was seriously injured in the incident.”

NHTSA is reviewing complaints of air bag nondeployment on 2008 Corollas and peer vehicles as well as other crash data, reported The Detroit News.

Toyota spokesman Brian Lyons said the company is cooperating with NHTSA and has not received its request for information.

NHTSA has also been investigating air bags that failed to deploy in Ford F-150 vehicles.

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Toyota And Microsoft Team Up On Telematics


Toyota Motor Corp. and Microsoft Corp. are teaming-up to deploy a next-generation telematics software platform that the automaker expects will debut on Toyota electric and plug-in hybrid vehicles next year.

The first applications developed for the platform will let drivers monitor and manage charging and energy use of electric and plug-in hybrid vehicles equipped with the technology, the companies said, reported Automotive News.

The companies plan to invest 1 billion yen, or about $12 million, into Toyota Media Service Co., a Toyota subsidiary, to support the partnership, the companies said in a joint statement today.

Toyota’s telematics applications will run on Microsoft’s Windows Azure platform, a so-called “cloud” computing platform, the companies said.

In essence, a cloud platform essentially allows software applications to operate remotely, using data and running on infrastructure stored over the internet, rather than on local software and hardware.

The deal stands in contrast to the Ford’s Sync infotainment system developed by Microsoft. Ford’s Sync system is an infotainment technology system installed in the car. Microsoft’s deal with Toyota affects the behind-the-scenes IT infrastructure Toyota uses to operate its telematics applications. From that platform, a variety of applications can be developed.

“Utilizing Windows Azure and Microsoft’s vast information infrastructure will boost the value of automobiles by making them information terminals, moving beyond today’s GPS navigation and wireless safety communications while reducing driver distraction,” Toyota president Akio Toyoda said today in an online press conference about the deal.

For example, the new system will include applications to manage vehicle charging to reduce stress on the electricity grid, remote control of home appliances connected to the grid, and applications using voice activation, Toyoda said in the press conference.

“Users will be able to turn on the heat or air conditioning in their car while their vehicle is plugged into the grid, or dynamically monitor miles until the next charging station right from their GPS system, or somebody could use a smart phone to check battery power or maintenance information remotely from their vehicle,” Microsoft CEO Steve Ballmer said in the press conference with Toyoda.

“Imagine being able to tell a car to charge at the time of day when demand for energy is low and therefore the least expensive time available,” Ballmer said.

The new platform could also allow for more applications to be developed for Toyota’s “Entune” infotainment suite that debuted at the Consumer Electronics Show last January, Toyoda said.

On another note, Toyoda said he was at first doubtful about leaving Japan today as the company struggles to get operations back to normal after last month’s earthquake, but he said working on future business opportunities was the best way to help Japan’s recovery.

Microsoft has worked with Toyota for more than a decade, but today’s announcement signals an escalation of their co-operation.

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