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UPDATE 2-Japan automakers eye restart at half of output plans
April 8, 2011 / 3:19 PM / in 7 years

UPDATE 2-Japan automakers eye restart at half of output plans

* Toyota to restart all Japan plants on April 18

* Honda to restart all car plants April 11

* Honda CEO wants return to pre-quake output in 2-3 months

* Japanese companies announce North American output cuts (Adds details on Toyota’s North American production plans, analyst comment on U.S. production)

By Chang-Ran Kim

TOKYO, April 8 (Reuters) - Japan’s top automakers plan to resume production at all domestic factories in stages starting on Monday, but output levels will be at half of original plans and depend on the availability of parts and power.

The historic 9.0-magnitude earthquake off Japan’s northeastern coast on March 11 damaged equipment, cut off electricity and disrupted the automakers’ complex supply chain, forcing them to suspend work at most factories.

On Thursday, another big tremor shook the devastated coast of northeast Japan, cutting off power to tens of thousands of households and causing a key supplier to the auto industry, Renesas Electronics (6723.T), to shut four factories.

Despite the new disruption, Toyota Motor Corp (7203.T) (TM.N) said it would reopen all 18 factories that build Toyota and Lexus cars from April 18 to 27, including a new site owned by subsidiary Central Motor that lost power on Thursday.

With supply of about 150 components still disrupted, Toyota said it would work at about half the rate of initial plans.

Toyota’s factories will be closed, as planned, between April 28 and May 9 for Japan’s “Golden Week” holidays and the company will decide on production plans beyond that while monitoring the supply flow.


Japan Disaster in figures:

Aftershock shakes northeast Japan: [ID:nL3E7F72Y2]

Japan sets power cut goals [ID:nL3E7F80B1]

Toyota production graphic:


The world’s biggest automaker restarted limited production of three hybrid models at two plants on March 28, and a third factory will begin producing two more models next Monday.

Toyota has lost potential production of 260,000 units during the unprecedented 20-day suspension to date.

Nissan Motor Co (7201.T) said it would resume normal production using parts delivered from suppliers, rather than inventory, in stages starting on April 11, with the last assembly plant to resume on April 18. [ID:nL3E7F80W8]

A dearth of supply from Renesas, the world’s top maker of microcontroller chips, is one of the main headaches for automakers, including those outside Japan that have been affected by the earthquake.

A Renesas spokeswoman said it was not clear when manufacturing would resume, although power had been restored to one plant. [ID:nL3E7F804E]


Even as Japanese factories gradually resume work, analysts expect production overseas to begin falling as parts run out.

Nissan said it would halt output at its Sunderland plant, in northeast England, for three days later this month, while Toyota and Honda are also bracing for lower output in some factories outside Japan. [ID:nL3E7F73J1]

Honda Motor Co (7267.T) said on Friday that production cuts in North America would be extended by one week through the week of April 18.

Toyota said most of Toyota’s plants in North America would be idled for six days this month to adjust for supply disruptions.

Toyota said it would suspend production at its North American vehicle plants on April 15, 18, 22 and 25. Most of Toyota’s plants will also be shut down on April 21 except for its plant in Georgetown, Kentucky. [ID:nN08302949]

Toyota is expected to lose production of 35,000 vehicles in North America through April 25, spokesman Mike Goss said.

Morgan Stanley analyst Adam Jonas said supply disruptions from Japan could delay the recovery in the U.S. auto industry to 2012 and 2013.

Jonas, who currently projects U.S. vehicles sales of around 14 million this year, said the mix of low inventory of cars and higher pricing could push sales to less than 13 million.

He said, however, that it was very difficult to accurately predict the impact of supply disruptions. “We warn that our degree of confidence in even running the most basic scenarios is extremely low,” he wrote in a note to clients.


Credit Suisse analysts have drawn up a base scenario under which Japanese automakers’ global output would fall 19 percent in the business year that started this month.

This assumes several factors, including the restart of Renesas’ damaged Naka factory in July. Depending on how smoothly the recovery goes, the drop could range between 15 and 50 percent, the brokerage said.

The head of Honda, which is due to restart limited production at all car plants on April 11, said he wanted to return to production levels before the March 11 quake in two to three months.

“We will strive to get back to normal operation as soon as possible by stabilising parts supply while also considering other options including changing the model mix at some production plants,” Chief Executive Takanobu Ito told reporters at Honda’s quake-hit R&D centre in Tochigi prefecture on Friday.

Ito, who visited the Tochigi site on his motorbike two days after the earthquake, said he expected a two-week delay in vehicle development, which he hoped to make up during the current business year. The earthquake last month badly damaged the R&D facility, killing one employee when a wall collapsed.

Shares of both Toyota and Honda closed up 1.4 percent on Friday, while Nissan slipped 0.8 percent. The main Nikkei average .N225 gained 1.9 percent. Toyota shares traded in New York closed 0.87 percent higher.

Additional reporting by Kentaro Sugiyama in Haga-machi, Tochigi, and by Ben Klayman and Deepa Seetharaman in Detroit; Editing by Joseph Radford and Matthew Lewis

Our Standards:The Thomson Reuters Trust Principles.
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