Monday 21 May 2018

Supply uncertainty looms for Toyota

Tokyo, April 12, 2011

Toyota Motor Corp warned that the uncertain supply of parts from Japan could threaten its output of vehicles through July.

This is the latest sign of trouble for the global auto industry stemming from the massive Japanese earthquake a month ago.

Ford Motor Co, meanwhile, said it would slow or shut down production in Asia in the last week of April and into May at its factories and joint ventures in the region, a step it said it did not expect would cut into second-quarter earnings.

The evidence of deeper and long-running output disruptions because of a shortage of key parts -- including semiconductors -- from Japan comes as major automakers grapple with complications caused by parts factories that have been shuttered or are running with limited power in Japan.

"Today we have good levels of inventory, but inventory will be getting tighter," Toyota's US sales chief, Bob Carter, told Toyota dealers in an email sent on Sunday.

"Toyota will be producing new vehicles at significantly reduced levels," Carter's note said. "What we don't know are vehicle production levels for May through July. The potential exists that supply of new vehicles could be significantly impacted this summer."    

The slowdown of production could limit Toyota's ability to capture market share on its fuel-efficient lineup this summer when US average gasoline prices are expected to top $4 per gallon, analysts have said.

In 2008, Toyota's sales for its Prius hybrid and small-car lineup, including Corolla, spiked when gas prices surpassed $4 per gallon.

As a way of explaining the complexities faced by Toyota and other automakers with the ongoing Japan-related parts shortages, Carter said delivery of about 800,000 auto parts have been affected by the earthquake and its aftermath.

For its part, Ford said in a filing with US securities regulators that the uncertainty surrounding the supply of components from Japan could affect its results, repeating a warning it had made 10 days earlier.

"Because the situation in Japan continues to develop, supply interruptions related to other materials and components from Japan could manifest themselves in the weeks ahead," Ford said in its filing.

"Should the supply of a key material or component from Japan be disrupted and an alternate supply not be available, we could have to reduce or temporarily cease production of vehicles," it said.

Ford's production in Asia includes its joint venture in China with Changan, and a plant operated in Thailand in a joint venture with Mazda.

The expected slowdown in vehicle production in both Japan and North America comes at a time when vehicle inventories at US dealerships are dwindling and auto sale prices are being pushed higher for consumers.

CNW Research said on Monday that early April US auto sales are showing the highest average transaction prices in relation to the manufacturers' suggested retail price since 1996.   

The average transaction price is the actual price to consumers of a new vehicle after manufacturer and dealer discounts and incentives. General Motors Co Chief Financial Officer Tim Ammann told analysts last week the impact of the Japan crisis might push vehicle prices higher and allow GM to cut back incentives.

GM had about 60 days supply of vehicles with its US dealers before the March 11 earthquake, slightly leaner than the corresponding levels for Toyota and Honda Motor Co. - Reuters   

Tags: Quake | Toyota | Ford | Japan | Supply | tsunami | parts |

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