Toyota Motor Corp. (TM) announced that it will suspend production in Europe for 8 days due to parts shortage resulting from the earthquake and tsunami in Japan on March 11 that damaged many parts supplying companies’ plants.
The automaker will halt production at 5 plants between April 21 and May 2. They are auto assembly facilities in Britain, France and Turkey, and engine plants in Britain and Poland. After the stoppages, the plants will be operated at limited capacity in May.
Recently, Toyota revealed that it will undertake one-day production shutdowns at all its plants in North America, except Georgetown, Kentucky, due to the same crisis. The shutdowns will begin April 15 and end April 25.
The company has also warned U.S. auto dealers about the tight supply of new vehicles over the summer. It is still determining vehicle production levels for May, June and July.
Nearly 70% of vehicles sold in the U.S. by Toyota are produced in its North American plants. About 75% of their parts are sourced from roughly 500 suppliers in North America and the rest 15% from Japan. The U.S.-made models include Camry and Avalon sedans, manufactured in Georgetown, Kentucky, and the Corolla sedan, produced in Ontario.
Few days back, Toyota announced that it will resume production at all its plants in Japan at half capacity from April 18 to 27. The automaker suspended its production at all the 18 plants in Japan from March 14 to 26.
Production resumed at only two plants in Japan since March 28 that build Toyota and Lexus cars. Those plants are assembling a limited number of three hybrid models at a reduced rate. Production at those plants account for only 3%–4% of normal capacity.
The disaster has resulted in a production loss of 260,000 cars from March 14 to April 8 for Toyota. The automaker is still struggling to procure about 150 types of parts. Previously, it faced shortages of about 500 types of components.
Toyota stated that it will again halt production at all its plants from April 28 to May 9. The period is considered as Golden Week holidays when factories would normally close.
Recently, Moody's Investors Service – the credit rating agency operated by Moody's Corp. (MCO) – warned that it may downgrade its credit rating for Toyota due to the disaster that will adversely affect the financial results of the company.
Currently, Moody’s set Toyota's long-term uncollateralized debt rating at Aa2. The rating agency will review Toyota’s credit rating based on its ability to restore production in Japan.
Almost all the Japanese automakers, including Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY), are plagued by the natural disaster in the country. They have suspended and cut down their production in the wake of plant outages and parts supply shortage.
Recently, Honda said that it will add a week to production slowdowns at its 11 North American auto plants until April 18. The company also expects further disruptions in production after that.
Meanwhile, Nissan stated that it would use 3 days of “Golden Week” spring holidays in Japan to make up for the lost production. The company’s Oppama and Kyushu assembly plants would work from April 28 to 30 at a reduced rate, while the Tochigi plant would be closed during the holidays from April 28 to May 5.
Toyota, a Zacks #3 Rank (Hold) stock, posted a 39% fall in profit to ¥93.63 billion ($ 1.14 billion) or ¥29.86 (36 cents) per share in the third quarter of fiscal 2011 from ¥153.22 billion ($ 1.86 billion) or ¥48.86 (59 cents) per share in the year-ago quarter. The fall in profit was attributable to lower sales in the Japan, North America and Europe as well as stronger yen.
Consolidated revenues in the quarter dipped 12% to ¥4.67 trillion ($ 56.74 billion) on the back of a 13% fall in global sales volume to 1.8 million units. Vehicle sales declined 21% to 507,861 units in North America, 31% to 402,476 units in Japan and 5% to 207,621 units in Europe. Meanwhile, sales rose 21% to 334,504 units in Asia and 2% to 349,219 units in Other regions.
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