Toyota Expects Earthquake-Related ‘Adjustments’ in North American Output

Toyota Motor Corp. (7203) expects assembly “interruptions” in North America and delayed sales of a new Prius model in its home market as the company grapples with the aftereffects of Japan’s strongest earthquake on record.

“We do expect some impact” on output, Javier Moreno, a Toyota spokesman in New York, said in an interview yesterday. While the company hasn’t made specific plans to reduce shifts at any plants in the U.S., Canada or Mexico, it has alerted workers that production cuts may be needed, he said.

Toyota, the world’s largest automaker, has operated North American vehicle-assembly and component factories normally since the magnitude-9.0 quake and tsunami struck Japan on March 11, with the exception of canceling overtime shifts to conserve parts. The Toyota City, Japan-based company this week extended a shutdown of all car-assembly plants in Japan until March 26.

Toyota and Japanese rivals’ efforts to resume output have been complicated by the need for hundreds of different components from suppliers whose plants may have been damaged by the earthquake and subsequent tsunami. Japan also faces electricity shortages after a nuclear power plant was crippled, as well as disruption to transportation infrastructure.

“It’s too early to predict location or duration” of any potential production halt in North America, Toyota said in a statement.

Shares in the automaker fell 0.9 percent to 3,275 yen in Tokyo as of 9:03 a.m. local time. The stock has fallen 10 percent since March 10, the day before the earthquake struck off Sendai, north of Tokyo.

Prius Wagon

Toyota, which said this month a wagon version of the Prius hybrid would be sold in Japan in April, said yesterday it will postpone the release. The company hasn’t determined whether U.S. sales of the Prius v wagon, scheduled to start by mid-2011, will also be delayed, it said in a separate statement.

“All automakers are just now figuring out who supplies every little part,” said Michelle Krebs, a senior analyst at Edmunds.com, an auto industry pricing and data service in Santa Monica, California. “The shortage of any one could shut down an assembly line. Toyota isn’t the only one vulnerable; virtually all major automakers have some risks.”

‘This Is Serious’

About 40 component suppliers in Japan remain in difficulty, Nissan Motor Co. Chief Executive Officer Carlos Ghosn said in an interview yesterday. Electronic components, plastics and rubber are in short supply and will affect both domestic automakers and overseas rivals, he said.

Carmakers are jointly offering parts suppliers support via Japan’s automobile manufacturers association, Ghosn said.

“This is serious and it’s still difficult to evaluate,” he said.

While Toyota makes more than 60 percent of the vehicles it sells in the U.S. at plants in North America, it relies on Japan for some parts and materials. The “greatest majority” of parts for models built in North America come from about 500 suppliers in the region, Toyota said in its e-mailed statement.

“We are a lot closer to understanding the impact on North American production” from the earthquake, said Mike Goss, a spokesman for Toyota’s manufacturing unit in Erlanger, Kentucky. The automaker continues to receive parts from Japan “that were already in the pipeline” before the quake, he said.

Honda, Nissan

So far, vehicle inventories at U.S. Toyota and Lexus dealerships remain at “normal levels,” said Steve Curtis, a spokesman for the company’s U.S. unit.

Honda Motor Co., which has shut auto-assembly plants in Japan until March 27, hasn’t made any adjustments to production schedules in North America and has no immediate plans to do so, said Ron Lietzke, a spokesman for the Tokyo-based company.

Nissan, which temporarily halted auto production in Japan after the quake, continues to run plants in the U.S. and Mexico on normal schedules, said Brian Brockman, a company spokesman. The Yokohama, Japan-based company is conducting a “feasibility study” on shipping some engines built in Tennessee to Japan to resupply operations there, he said.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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