Toyota Said to Move Toward China Plant Restart After Blasts

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Tianjin blast

Clean up operations underway at the site of Tianjin warehouse explosion in Tianjin, China.

Photographer: ChinaFotoPress via Getty Images

Toyota Motor Corp. is beginning trial production of cars at the China plants that were shut after explosions in the city of Tianjin, the first step in reopening the facilities following a two-week closure, people familiar with the matter said.

Workers have returned to the plants and Toyota is preparing to resume output on a trial basis before making a decision this week on whether to resume full production, said the people, who asked not to be named discussing private plans. A test run of about 100 cars will start today, one of the people said.

Production has been shut down at Tianjin FAW Toyota Motor Co., the Japanese carmaker’s local affiliate, since the Aug. 12 blasts at a chemical storage site in the northern Chinese port city. The explosions killed at least 123 people and injured 67 Toyota workers who live in the area. About 4,700 Toyota and Lexus vehicles were also damaged.

Toyota hasn’t made a decision yet on when it will restart production, Ryo Sakai, a company spokesman, said by phone. The carmaker has said its local operations will restart once it’s able to confirm the safety of its facilities and the surrounding area.

Toyota rose 2.9 percent to 6,920 yen at the 3 p.m. close in Tokyo trading, the biggest gain since Dec. 19. Japan’s benchmark Topix index climbed 3.2 percent.

The Tianjin disaster took a broader toll on the auto industry, damaging 2,700 Volkswagen AG vehicles, shutting a nearby Hyundai Motor Co. logistics center and forcing Fuji Heavy Industries Ltd. to divert car shipments to Shanghai. The warehouse that exploded stored about 1,300 metric tons of oxide compounds, the official Xinhua News Agency reported, citing Tianjin Vice Mayor He Shushan.

Lost Production

The value of Toyota’s lost output may be more than 660 million yuan ($103 million) a week, according to a Bloomberg calculation. Tianjin FAW Toyota built about 26,300 vehicles a month through July, according to figures from researcher LMC Automotive. Assuming the cars are sold at base prices, the value of that monthly production is about 2.83 billion yuan.

The calculation is based on the starting prices and average monthly output for each of the models Tianjin FAW Toyota makes, ranging from the 69,800-yuan Vios sedan to the 264,800-yuan Crown. The affiliate built about 440,000 Crown, Reiz, Corolla and Vios cars last year, almost half of Toyota’s annual vehicle output in China.

Toyota can’t comment on the value of the lost output, said Nick Maxfield, a spokesman for the company.

“The end result will depend on whether or not adjustments are made to recover lost production,” Maxfield said in an e-mail. “Similarly, lost sales will depend on the amount of inventory currently at dealerships, and the amount of supply chain disruption we can expect going forward.”

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