Thai flooding impact spreads across world for Toyota

TOKYO (Reuters) - Toyota Motor Corp said it would keep its Thai production suspended for a fourth week and reduce output in North America and South Africa, marking the first impact of the floods in Thailand on car production outside Asia.

Thailand’s worst floods in 50 years have affected hundreds of manufacturers and cut off the supply of about 100 components for Toyota, Thailand’s top automaker with a production capacity of 650,000 vehicles a year at its three factories there.

Japanese automakers dominate the southeast Asian car market and the stoppages are set to eat into profits just as they were beginning to ramp up output after supply disruptions from the March 11 earthquake and tsunami in northeast Japan. Many car makers had also recently announced a slew of new investments in the region to meet booming demand.

Toyota, the world’s biggest automaker, said it did not know yet how much the reduction in output would affect its results.

“We will make an announcement right away if we find out there will be a big impact on our earnings,” it said in a statement on Thursday.

Thailand’s disaster also began affecting output outside the country this week, with Toyota cancelling overtime at all its Japanese vehicle plants, causing a production loss of 7,000 vehicles through Saturday.

Toyota also cut back work in Indonesia, Vietnam and the Philippines this week and on Thursday added the United States, Canada and South Africa to the list of countries that will trim production starting on Monday.

A Toyota spokeswoman said the company did not know yet how much production would be reduced in all the regions.

With many suppliers directly hit by the deadly floods, automakers are scrambling to procure replacement parts and assess the extent of disruption to the supply chain.

Rival Honda Motor Co has postponed the launch in Japan of a special edition of its Life minivehicle that had been scheduled for October 13. Its 240,000-cars-a-year factory in Thailand’s Ayutthaya area is still under water, also forcing its 40,000-units-a-year factory in Malaysia to close for most of this week.


Before the update on Thursday, Tokai Tokyo Research analyst Mamoru Katoh had estimated a 5,000-vehicle daily output reduction for Toyota globally based on its previous plans. Assuming a 300,000 yen ($4,000) profit on each vehicle, that would amount to a 1.5 billion yen ($19.7 million) reduction in profit every day, he wrote in a report.

In North America, Toyota said it would cancel production on October 29 in Indiana and Kentucky, two plants in Ontario, Canada, and an engine plant in West Virginia to conserve parts.

Japan’s Chunichi newspaper cited an unnamed Toyota executive as saying a complete normalization of parts supply and production in Thailand could take until December or later. Toyota said the situation remained unclear.

About 1,800 Japanese manufacturers operate in Thailand, including Canon Inc, Pioneer and Sony Corp.

Honda, Japan’s No.3 automaker, said its car, motorcycle and power product factories in Thailand will remain closed at least until October 31, in line with the government’s calling of a special five-day holiday to let people escape.

Nissan Motor Co said it expects to provide an update for next week on Friday. Its Thai production has been halted since October 17.

With many car components exported from Thailand, the disruption may spread to more regions for Nissan and Honda as well, as inventories run out.

In September, before the floods began shutting car factories, Toyota built about 70,700 vehicles in Thailand, Nissan about 20,000 and Honda about 22,000.

Toyota shares in Tokyo ended up 2.2 percent, Nissan gained 4.2 percent and Honda rose 2.8 percent, while the benchmark Nikkei average closed up 2.0 percent.

Additional reporting by Nobuhiro Kubo and Mayumi Negishi in Tokyo and Shounak Dasgupta in Bangalore; Editing by Joseph Radford and David Holmes