Toyota eyes Japan output at 90% of pre-quake level
TOKYO (AFP) – Japanese auto giant Toyota said Wednesday its domestic output would return to about 90 percent of pre-quake levels in June thanks to a faster-than-expected recovery of parts supplies.
The forecast, more positive than a previous estimate of 70 percent production levels, will be a huge improvement on April when output was just 21.6 percent of that in the same month last year.
Production recovered to around 70 percent in May as suppliers -- many of whom were impacted by the March 11 quake and tsunami catastrophe -- were able to restore operations faster than expected.
There are no precise figures for production abroad, but expectations for June are between 70 and 100 percent, Toyota spokesman Paul Nolasco said.
Production will still be 70 percent in North America while almost all factories in Europe will operate at 100 percent, he said.
The March 11 disaster hammered production, shattered supply chains and crippled electricity-generating facilities, including the Fukushima nuclear power plant at the centre of an ongoing atomic emergency.
Amid the power and parts shortages, Toyota had slowed output or closed factories temporarily in Japan and abroad.
Despite Wednesday's more upbeat announcement, Toyota shares fell 0.58 percent to 3,380 yen, as investors had already priced in the faster-than-expected production recovery.
News reports said that, for the whole of the current fiscal year to March 2012, Toyota's global output would match last year's as the company is set to increase production from late 2011.
Recent Japanese auto industry data has highlighted the massive impact of the quake, but also pointed to a better-than-expected recovery.
On Tuesday the Japan Automobile Manufacturers Association (JAMA) said production and exports suffered record drops of more than 60 percent each in April as a result of the twin disaster.
The trade and industry ministry, citing production plans by manufacturers, said Tuesday that output of transport equipment including cars was to rise 35.7 percent month-on-month in May and by a further 36.7 percent in June.
New data from the Japan Automobile Dealers Association (JADA) showed Wednesday domestic sales of new cars, trucks and buses in May fell 37.8 percent from a year earlier, an improvement from a record drop of 51 percent in April.
The latest drop was milder as auto production had improved, an association spokesman said.
The disaster is set to increase demand for new cars in the longer run.
"Lots of cars were washed away in the tsunami in the Tohoku (northeastern) region, and it's certain that there will be surging reconstruction demand," said Tatsuya Mizuno, who heads the Mizuno Credit Agency.
"Production may not be able to catch up with the demand, resulting in missed sales opportunities for automakers."
To overcome parts shortages, Mizuno said, carmakers had been buying from factories outside the disaster zone or from abroad.
However, he warned that there could be problems as some electronic car parts are made by only a handful of firms.
"If one company that has an overwhelming market share does not function, it hampers automobile production," he told AFP.
"It will take some time (for automakers) to achieve full production," he said, adding that it would probably take half a year or more for vehicle manufacturing to return to normal.
Electronics firm Renesas Electronics, which has a 40 percent global share of microcomputers used in autos, resumed partial operation Wednesday at its quake-damaged chip factory in Ibaraki prefecture, northeast of Tokyo.
But it will not be able to begin shipments until late August as microchips need to go through several manufacturing and test processes.
Looking at the wider economy, Bank of Japan governor Masaaki Shirakawa said industrial supply disruptions were easing more quickly than expected, which would help the economy return to moderate growth in October-March.
Shirakawa told a conference in Tokyo that he still believed the economy would stay under "strong downward pressure" for the time being.
But he said "the economy is expected to return to the moderate recovery path from the second half" of the fiscal year, Dow Jones Newswires reported.