Tag Archive | "Toyota Motor Corp."

Yen Strength Seen Costing Toyota More Than Record Quake


The earthquake that crippled Japan in March may cost Toyota Motor Corp. less than the rising yen.

Operating profit for the world’s top carmaker will be cut by 250 billion yen ($3.3 billion) in the year ending March 31 because of the currency’s advance, based on the average estimate of five analysts surveyed by Bloomberg. The natural disaster may cost 160 billion yen, Toyota said in August.

“There is pent-up demand and with production back to normal, Toyota can quickly make up for the reduction in output due to the quake,” Issei Takahashi, a Tokyo-based auto analyst at Credit Suisse Group AG, which has a “neutral” rating on the carmaker. “It’s more of the reality of the strong yen that Toyota needs to tackle.”

The maker of the Prius and Camry produces two out of five vehicles in Japan, making it more vulnerable to the yen than Nissan Motor Co. and Honda Motor Co. The currency’s climb, to a postwar high against the dollar in August and the strongest in a decade versus the euro last month, is an added headwind for Toyota, which was outsold by General Motors Co. and Volkswagen AG in the first six months of the year.

Toyota fell 0.3 percent to 2,582 yen at the 3 p.m. close of Tokyo trading. The stock has fallen 29 percent since March 10, the day before the temblor.

“We are struggling,” Toyota’s Chief Financial Officer Satoshi Ozawa said Oct. 10 at the automaker’s factory in Ovar, Portugal. “We are facing a difficult time. We have to reduce our production costs to compensate for the currency situation.”

That may involve shifting manufacturing from Japan “to some extent,” he said.

Ozawa and Managing Officer Shigeru Hayakawa will meet the press to report Toyota’s second-quarter earnings Nov. 8.

Toyota is telling parts suppliers to slash prices or face being replaced by overseas rivals, according to four people involved with the discussions.

The Toyota City, Japan-based automaker made the demand for price cuts to its 219 largest domestic suppliers at the end of August, including Denso Corp. and Aisin Seiki Co., at a meeting held in Nagano prefecture, according to the people.

Every one-yen advance against the dollar cuts Toyota’s operating income by 34 billion yen, while a gain versus the euro reduces operating income by 6 billion yen, according to the company’s full-year forecast in August. Toyota is basing this year’s forecast on 80 yen to the dollar and 116 yen to the euro.

The yen traded at 76.66 to the dollar yesterday, extending this year’s gain to 6.1 percent. The Japanese currency has risen 4.3 percent in 2011 against the euro, which traded at 104.25.

Toyota made about 45 percent of its cars in Japan last year, compared with 25 percent for Nissan Motor Co. and 26 percent for Honda Motor Co.

Honda expects a 71 billion yen cut in operating profit while Nissan sees a 135 billion yen reduction because of the yen’s climb this year.

Japan’s government needs to establish “a normal exchange rate,” Carlos Ghosn, Nissan’s chief executive officer, said on Oct. 6.

The yen is expected to trade at 79 yen to the dollar in the year ending March 31, according to the average of 43 analyst forecasts compiled by Bloomberg.

“Sooner or later, Toyota will have to revise its forecast,” Kohei Takahashi, an analyst at JPMorgan Chase & Co., said in a phone interview.

Toyota said Aug. 2 it expects the strong yen to cut operating profit by 160 billion yen in the year ending March 31 to 450 billion yen, compared with an earlier forecast in June for a 100 billion yen drop. The carmaker put the one-time cost from lost production of 150,000 units after the quake at 160 billion yen.

Credit Suisse estimates the yen impact at 260 billion yen, TIW sees a 350 billion yen cut in operating profit, and JPMorgan estimates a drop of 200 billion yen. Citigroup Inc. and Carnorama predict declines due to the currency at 238.4 billion yen and 200 billion yen respectively.

Toyota temporarily halted all production after the magnitude-9 earthquake and tsunami on March 11 triggered a shortage of parts and electricity.

The resulting cutbacks caused the automaker to fall behind GM and VW in global sales in the first half of the year.

Toyota and subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. sold a combined 3.71 million vehicles worldwide in the first half. GM, based in Detroit, sold 4.54 million cars and light trucks, while Wolfsburg, Germany-based VW sold 4.13 million vehicles, according to statements by the companies.

The Bank of Japan last week held off adding more monetary stimulus. Governor Masaaki Shirakawa and his policy board members unanimously kept the overnight lending rate between zero and 0.1 percent at a meeting in Tokyo Oct. 7, the central bank said in a statement.

They also left credit and asset-buying programs totaling 50 trillion yen unchanged, while extending a loan program in earthquake-affected areas. Shirakawa called existing easing measures “powerful.”

Toyota reported global production in August rose for the first time in 12 months, showing the automaker’s return to normal production. Output in August rose 10.6 percent to 626,817 vehicles, the first increase since September 2010, when the government ended subsidies for fuel-efficient cars. The automaker has pledged to maintain domestic production of 3 million units.

Still, Toyota lost market share in the U.S. and expects dealers’ inventories to return to pre-quake levels by March, according to spokeswoman Amiko Tomita. Held back by tight supplies of Prius hybrids and Tundra pickups, Toyota’s market share fell to 11.5 percent from 15.3 percent a year earlier in September, according to researcher Autodata Corp.

“Toyota needs to quickly come up with a strategy to maintain its earnings,” said Satoru Takada at TIW. “It doesn’t seem like the yen will weaken anytime soon.”

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Toyota Tells Suppliers to Cut Price or be Replaced


Toyota Motor Corp., Asia’s biggest carmaker, is telling parts suppliers in Japan to slash prices or face being replaced by overseas rivals as the yen’s value appreciates, four people involved with the discussions said.

Toyota, which loses 34 billion yen ($443 million) in operating profit for every 1 yen appreciation against the dollar, told parts makers it intends to increase procurement in emerging markets in cases where domestic suppliers can’t match overseas prices, according to the people, who declined to be identified because the talks are private, according to The Detroit News.

Parts-making affiliate Toyota Boshoku Corp. led declines among the automakers’ suppliers in Tokyo trading, dropping 5.8 percent to its lowest close since March 2009.

Toyota seeks to cut costs to compensate for the yen’s climb as it restores output in Japan after the March 11 earthquake and tsunami damaged factories and caused parts and power shortages.

Toyota officials in North America declined to comment on any discussions with suppliers regarding cost.

The issue is especially pressing in Japan, where the yen’s appreciation against other currencies has eroded the profitability of Japanese vehicle exports.

“The high yen must be pressuring Toyota to review its supply chain and to seek cheaper options,” Hiroshi Ataku, an analyst at IHS automotive in Tokyo said.

Carlos Ghosn, chief executive officer of Toyota’s biggest domestic rival Nissan Motor Co., said Thursday that Japan faces a “hollowing out” of its industries should the government fail to take steps to counter the yen’s rise.

Toyota made the demand to its 219 largest domestic suppliers, including Denso Corp. and Aisin Seiki Co., at a meeting held at the end of August in Nagano prefecture, the people said.

Denso Corp. dropped 3.4 percent to 2,249 yen at the 3 p.m. close on the Tokyo Stock Exchange, the lowest since Aug. 24. The benchmark Nikkei 225 Stock Average rose 1 percent.

Toyota spokeswoman Amiko Tomita in Tokyo declined to comment on the automaker’s discussions with partsmakers about prices.

Nissan’s Ghosn, after taking over as president of the Japanese automaker in 2000, slashed the number of domestic suppliers to cut costs and restore the automaker to profit. That recovery is now threatened by the Japanese currency’s sharp rise, Ghosn has said.

The yen strengthened to a postwar record 75.95 yen versus the dollar in August and has averaged about 80 yen in the fiscal year started April 1, compared with almost 90 yen in the same period a year earlier.

Toyota has committed to manufacturing at least 3 million vehicles a year in Japan and has “naturally” favored its affiliated domestic parts suppliers, Ataku of IHS said.

“Toyota may have to follow what Ghosn did with Nissan’s parts supply chain 10 years ago, and search for the cheapest possible options,” he said.

Japan-based suppliers should procure more parts from overseas as one way to reduce their prices, Toyota said, according to the people involved in the discussions. The company requested to reduce prices by as much as half to some of its suppliers, according to one of the people.

The automaker, based in Aichi prefecture, Japan, has said it expects global production to rise 5.1 percent from a year earlier to 7.72 million units in the 12 months ending March 31.

Toyota rose 0.4 percent to 2,549 yen.

Toyota’s global output increased 10.6 percent to 626,817 vehicles in August, the first increase after the government ended subsidies for fuel-efficient cars in September 2010, the Toyota City, Japan-based carmaker said Sept. 28. Domestic output gained 12 percent to 252,374, while overseas production rose 9.8 percent to 374,443, it said.

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MIT Joins Toyota’s Safety Research Program


ANN ARBOR—Drivers are urged to keep their eyes on the road and their hands on the wheel — and off their smart phones. But they can be looking straight ahead and still be distracted if they’re engaged in conversation on a hands-free phone or with the car’s voice-activated controls, according to studies at the Massachusetts Institute of Technology.

“Keeping your eyes on the road doesn’t mean your mind is on the road,” said Bryan Reimer, a research scientist at MIT. The university will work with Toyota Motor Corp. on a study to quantify how voice-activated systems affect drivers. The project is one of several that Toyota’s new Collaborative Research Safety Center is conducting with educational and other institutions to improve vehicle safety, reported The Detroit News.

Toyota officials said at the Detroit auto show in January that the company, struggling to restore its reputation after massive safety recalls, would spend $50 million over five years on safety research projects, most of them with U.S. partners.

“The establishment of the Collaborative Safety Research Center was the direct result of the commitment that (Toyota President) Akio Toyoda made to Congress and to the American people that Toyota would advance automotive safety research,” said Chuck Gulash, director of the center.

Its research will be available to other automakers and organizations in a bid to make all cars and trucks safer. The center also aims to contribute and help speed up the establishment of industry-wide standards, said Moritaka Yoshida, Toyota’s chief safety technology officer.

Based in Japan, he traveled to Ann Arbor to attend a two-day conference on the safety projects at Toyota’s North American technical center.

In addition to tackling driver distraction — one of U.S. Transportation Secretary Ray LaHood’s chief concerns — the center also is trying to address the needs of vulnerable groups, such as the elderly, small children and young drivers. Drivers in their teens and early 20s are proportionately involved in far more fatal accidents than other adults, as are people in their late 70s and older.

Vehicle crashes are the leading cause of death for 16- to 19-year-olds, who are less experienced and more reckless than older drivers, studies show.

Toyota is teaming up with the Virginia Tech Transportation Institute on a project to film young drivers and alert them to any risky behaviors they display. The teenagers don’t seem inhibited by the cameras as they eat, dial phones and multitask in other ways — all behind the wheel.

“We believe it’s in the first couple of hours that people forget” that they’re being observed, said Charlie Klauer at the institute.

The widespread use of seat belts and other passive safety systems has helped bring down U.S. traffic fatalities even though people are driving more.

“But still, 30,000 people are killed a year,” said Gulash.

They include a disproportionate number of elderly drivers and passengers whose bodies and bones, particularly rib cages, change shape over the years. They need air bags and seat belts that take this into account.

The elderly also tend to have slower reaction times and reduced fields of vision. But their powers of observation can improve with exercises that can be done on desktop computers, such as the DriveSharp program.

Toyota will develop special senior versions of its virtual test dummies, called Thums, for Total Human Model for Safety, which depict how organs as well as bones react to outside force and are used by suppliers and other companies.

“The collaborative approach is a way to accelerate and also to standardize — which is a really critical issue,” said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor and now with AutoHarvest, an organization promoting auto technology sharing.

Among the local projects, Toyota will team up with the University of Michigan Transportation Research Institute to study the relationship between age and seated posture in a car, and how it affects seat belt fit.

Toyota will study Washtenaw County crash data to explore new models of crash data collection and ways to prevent collisions.

It will conduct a three-year study of driver distraction with Wayne State University’s School of Medicine, as well as a longer joint study into body characteristics of children and seniors and how to take them into account when designing safety systems.

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Toyota Gave Old Robots New Tools to Reduce U.S. Camry Price 2 Percent


Toyota Motor Corp. was able to trim the U.S. price of its new Camry sedan about 2 percent from the previous version in part by re-using old assembly robots from its former joint-venture plant in California.

“A lot of the tooling is new, however the equipment isn’t,” Steve St. Angelo, executive vice president for North American manufacturing and engineering, said in an interview. “We used a lot of used equipment” from the now-closed New United Motor Manufacturing Inc. plant, or Nummi, he said.

The eight versions of the 2012 Camry that go on sale this month cost an average of $25,245.63, down $550.63 from the models they replace, based on prices released by Toyota in a statement on Aug. 23. The high-volume Camry LE’s price fell $200 and the XLE grade dropped $2,000, according to Bloomberg.

Toyota, Asia’s largest carmaker, is under pressure to trim costs and boost the appeal of models such as the top-selling Camry as Hyundai Motor Co. and Ford Motor Co. expand sales of competing midsize and compact cars. While the Camry remains the best-selling car in the U.S. this year, sales are down 7 percent through August. Deliveries of Ford’s midsize Fusion sedan are up 16 percent and Hyundai’s Sonata is up 22 percent.

“They couldn’t have tolerated a price increase for Camry in this market,” said Jim Hall, who runs automotive consulting firm 2953 Analytics Inc. in Birmingham, Michigan. “We’re basically still in a recession.”

Toyota’s North American plants are finding more savings by salvaging equipment no longer needed at some factories, St. Angelo said at the company’s automotive museum this week in Torrance, California.

In the case of the redesigned Camry, “we bought equipment from Nummi,” he said. “We used robots from Nummi,” said St. Angelo, who didn’t elaborate on how much that move saved.

“They were lucky there happened to be a plant closing with surplus equipment available when they were developing the new model,” said Hall. “They haven’t had that before.”

Nummi was the Fremont, California, plant Toyota shared with the former General Motors Corp., which abandoned the factory when it entered a U.S.-backed bankruptcy in 2009. That company emerged as General Motors Co. Toyota opted not to operate the factory alone and closed it last year.

Along with the production robots transferred to Toyota’s Georgetown, Kentucky, plant that makes most of the Camrys sold in North America, Nummi equipment was also acquired by Toyota’s San Antonio plant and by electric-car maker Tesla Motors Inc.

Tesla, which bought most of the former Nummi site, will begin building its battery-powered Model S sedan there next year. Toyota is also a shareholder of Tesla.

Toyota’s U.S. sales unit is also based in Torrance. The company’s American depositary receipts, representing two ordinary shares, rose $1.64, or 2.4 percent, to $71.21 at the 4:03 p.m. in New York Stock Exchange composite trading.

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Toyota Resumes Full North America Output as Engine Production Set to Rise


Toyota Motor Corp. resumed full production at all North American plants this week and said it will expand U.S. output of small engines as Japan’s largest automaker works to boost sales slowed by a March earthquake, according to Bloomberg.

As of this week, “all plants and suppliers in North America are at full speed, and most are working overtime,” Steve St. Angelo, executive vice president for North American engineering and manufacturing, told reporters yesterday in Torrance, California. “Our parts problems are now behind us.”

Toyota will also add production of four-cylinder engines at its plant in Huntsville, Alabama, St. Angelo said. The company will hire 240 more workers at the factory, which already makes six- and eight-cylinder engines for Toyota models built in the region, he said. Four-cylinder output will start late this month, said Mike Goss, a Toyota spokesman.

The company briefly halted production after Japan’s record earthquake and tsunami in March and lost sales in markets including the U.S. as reduced supplies of parts and power in Japan led to vehicle shortages. Through August, the Toyota City, Japan-based automaker’s U.S. sales fell 7.8 percent as the industrywide total rose 10.5 percent.

Toyota already makes four-cylinder engines in Georgetown, Kentucky, and Buffalo, West Virginia. The added production will be for Corollas to be built at the company’s Blue Springs, Mississippi, plant, which opens in November, St. Angelo said in an interview yesterday at the company’s U.S. museum in Torrance.

Production of the 2012 Camry that goes on sale this week is accelerating at the Georgetown plant, the company’s largest in North America, said St. Angelo, who joined Toyota in 2005 after working for the former General Motors Corp. for 30 years.

Toyota’s U.S. sales unit is also based in Torrance. The company’s American depositary receipts, each representing two ordinary shares, rose 88 cents, or 1.3 percent, to $69.05 yesterday in New York Stock Exchange composite trading.

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Most Japanese Automakers Report Weak July Production


TOKYO — Most Japanese automakers reported lackluster vehicle production and sales for July, underscoring ongoing malaise in the industry as it grapples with a strong yen, precarious global economy and recovery from the March 11 tsunami.

Worldwide production at Toyota Motor Corp. fell 6.1 percent from a year earlier to 594,614 vehicles, the company said Tuesday. Its domestic sales of passenger cars, trucks and buses tumbled more than 35 percent, and exports fell 5 percent due to weaker shipments to North America, according to The Detroit News.

Toyota, however, said its production returned to levels that were near to what it had planned before the March earthquake and tsunami struck Japan’s northeastern coast, wiping out auto parts suppliers.

The automaker is preparing to ramp up production in the coming months to make up for the capacity lost to the disaster. Between October and March 2012, the automaker plans to build an extra 350,000 vehicles.

The numbers were worse at Honda Motor Co., where global production tumbled more than 34 percent to 206,727 vehicles in July. It was the sixth straight month of decline.

Honda’s domestic sales of vehicles fell 31.5 percent and exports retreated more than 19 percent.

Standing above the crowd was Nissan Motor Co., which continued to gain momentum and set company records in July.

The Yokohama-based automaker recorded an almost 18 percent jump in worldwide output to 388,680 vehicles — its best-ever July performance. Production in the U.S. benefited from stronger demand for the Altima sedan, Nissan said.

Although Nissan’s Japan sales fell 17 percent in volume terms, global sales overall rose 8 percent. Exports surged more than 23 percent.

Among Japan’s other car makers, Suzuki Motor Corp. posted a 3.6 percent decline in global production to 228,147 vehicles.

Worldwide output at Mazda Motor Corp. fell almost 13 percent to 103,384 vehicles. At Mitsubishi Motors Corp., it declined about 5 percent to 97,862 vehicles.

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