Toyota: Production Back To Normal in November or December

Toyota and the other automakers in Japan have been working hard to get production back on track after the earthquake of March 11th. Just how far they still have to go, though, is evidenced by Toyota’s latest comments that manufacturing operations are not likely to get back to normal until November or December this year. Production in Japan is expected to start to head back to normal levels from July, and for production outside of Japan this is expected to occur from August.

The damage to the supply chain caused by the earthquake has been a major factor hurting production,  and so normalizing this is a key to getting complete vehicle production back on schedule. To this end, Toyota has managed to bring down the number of “problem” components from 500 to 150 – a Herculean task in itself – but as you can see from the figures, there is still a way to go. I expect that these last 150 parts are probably the more problematic ones that will take longer to solve.

Although production in Japan resumed at all Toyota’s factories from April 18th, manufacturing in Japan is expected to run at half capacity until June 3rd. Outside of Japan, this figure is 30 to 50% of normal output. The effect so far has been a loss of production equivalent to 260,000 vehicles in Japan, 150,000 in the US, 80,000 in China and about 50,000 in Europe.

Last year Toyota produced 7.7 million vehicles, so this represents a loss equivalent to 7% of 2010 annual production. Given that production is not expected to completely normalize until the end of the year now, it seems likely that the overall loss of production capacity may well come in at the equivalent of 15% to 20% of 2010’s production numbers, which would create substantial damage to Toyota’s bottom line.

Source: Reuters (Japanese language)