Toyota March output down 62%; risks sliding down to world number 3 this yr
Toyota Motor Co may slip to number three in the auto maker production rankings behind General Motors and Volkswagon due to Japan’s earthquake and nuclear crisis, which slashed local output by almost two-thirds in March alone.
A shortage of parts in the wake of the March 11 earthquake and tsunami has savaged Japan’s auto sector supply chain, while damage to a major nuclear plant has disrupted power supplies.
Investors expecting overseas rivals to benefit from a prolonged slump in Japanese output pushed up shares in South Korea’s Hyundai Motors and associate Kia Motors to record highs on Monday.
“Hyundai and Kia will be the biggest beneficiaries of the struggling Japanese car industry,” said Suh Sung-moon, an analyst at Korea Investment & Securities in Seoul.
“Hyundai will focus on the high-end market and Kia has the capacity to boost volume shipments. It’s a great mixture to catch up with Japanese rivals.”
Honda Motor Co, Japan’s number three auto maker, said today it would take until the end of the year before production returned to normal, echoing comments from Toyota on Friday.
Honda, which reported domestic production shrank 62.9 per cent in March, said output would be at 50 per cent of its original plans until the end of June.
Domestic production at Toyota, the world’s largest auto maker, fell 62.7 percent in March, while Japan’s number two Nissan Motor Co said its corresponding figure fell 52.4 per cent.
Toyota is almost certain to lose the top producer ranking it has held since 2008 to General Motors this year and could fall behind number three to Volkswagon, said Koji Endo, managing director of Advanced Research Japan in Tokyo.
Toyota, which sold 8.42 million vehicles last year versus GM’s 8.39 million, was on track to post sales of around 6.5 million units this year, Endo said. Other analysts, lacking clear guidance from Toyota, expect sales of roughly 6.3-7 million units.
“Most likely GM will produce eight million-plus and Volkswagon will produce around seven million, so most likely Toyota will be third, GM will be first,” Endo said.
Volkswagen has a stated goal of taking Toyota’s number one spot and expects its 2011 sales to top the record 7.14 million vehicles it sold last year.
Toyota, criticised by some analysts and investors for its aggressive expansion in the early 2000s, played down the prospect of losing its top ranking.
“When Toyota became number one there were no champagne corks going off here,” said Toyota spokesman Paul Nolasco. The March sales were the worst since records began in 1988, he added.
NO CLARITY
Japanese auto makers have not forecast what impact the production cuts will have on earnings, but analysts have been slashing their forecasts since the disaster.
For Toyota, 11 analysts who revised their forecasts after the earthquake forecast an average operating profit of 281.9 billion yen for the year to March 2012.
That is down 65 per cent from the consensus of 804 billion yen from 21 analysts before the quake, according to Thomson Reuters. Toyota announces its results on May 11, but it is not certain if it will provide its own forecast.
“In overseas markets consumers have choices and (non-Japanese makers) probably will take some share, but I think it is an open question if those will be sustainable or temporary share changes — my guess is that they will tend to be temporary,” said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets in Tokyo.
Shares in major Japanese auto makers were slightly weaker on Monday, with Toyota ending down 0.6 per cent, Honda down 1.3 per cent and Nissan 1.8 per cent lower. The main Nikkei index closed down 0.1 per cent. Tokyo’s transport equipment sub-index has bounced about 14 per cent from its post-quake low, but is still more than six per cent below where it was before the disaster struck.
In contrast, Hyundai has surged 30 per cent over the same period on expectations it will benefit from the woes of its Japanese rivals. Hyundai shares jumped 5.6 per cent to a record high on Monday, while Kia shares also hit a record, up 3.2 per cent.
