Toyota Leads Japan Automakers’ Drop in Output After Quake

Toyota Motor Corp. (7203), the world’s biggest carmaker, said its global output fell 30 percent to 542,465 vehicles in March, led by a drop in Japan after a record earthquake disrupted production.

Production in Japan plunged 63 percent to 129,491 vehicles, the company said in a statement today. Exports declined 33 percent to 107,751, the Toyota City-based car company said.

Toyota, Honda Motor Co. and Nissan Motor Co. are working to restore full operations after last month’s magnitude-9 temblor and tsunami damaged factories and caused parts and power shortages. Toyota’s lead over General Motors Co. and Volkswagen AG, the second and third-largest carmakers, may be narrowed this year as the Japanese company expects production may not return to normal until December.

“Japanese carmakers’ biggest problem is that they want to keep core technology for key components in Japan,” said John Zeng, a Shanghai-based analyst for researcher J.D. Power & Associates. Those components include computer chips and key engine parts, he said.

Renesas Electronics Corp., a chipmaker that has 30 percent of the world market for microcontrollers used in cars, said April 22 it will restart production at a damaged factory on June 15, prompting Toyota to say production will return to normal levels by December at the latest.

Shares in Toyota fell 0.6 percent to 3,275 yen today as of the 3 p.m. close in Tokyo. The company has lost 10 percent since March 10, the day before the earthquake. Nissan, Japan’s second-largest carmaker, has declined 7 percent, while third-ranked Honda has fallen 8.7 percent.

Lost Production

Toyota may lose production of 300,000 vehicles in Japan and 100,000 overseas through the end of April due to quake- related shutdowns, Executive Vice President Atsushi Niimi said last week. The company is unlikely to meet its full-year global production target of 7.7 million vehicles, he said.

About 150 parts, mostly materials such as rubber and plastics, are still in critically short supply President Akio Toyoda said April 22.

While Toyota has increased local procurement rates for overseas production, investigations since the quake have shown that many second- and third-tier components still come from Japan, Executive Vice President Shinichi Sasaki said last week. Toyota may ask tier-one suppliers to raise their own local procurement rates to reduce their reliance on Japan, he said.

Fiscal 2010

Toyota made 7.34 million vehicles in the fiscal year ended March 31, an increase of 0.9 percent from the previous 12 months, the company said today.

Honda’s March output fell 19 percent to 282,254 vehicles, with Japan production dropping 63 percent to 34,754. Nissan increased production 9 percent to 382,704 vehicles even as output at domestic factories declined 52 percent to 47,590.

Honda’s car and parts output in Japan will remain at 50 percent of regular capacity until the end of June, the company said today. Production will return to normal levels by the end of the year, it said.

Japanese carmakers also face possible blackouts after the natural disasters reduced the nation’s power-generating capacity by 8 percent. Automakers are considering electricity-saving options such as shutting plants and offices for two days a week and shifting work to weekends to conserve power.

To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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

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