Japan earthquakes freeze production on Toyota line

KUCHING: The two earthquakes that hit Japan in Kyushu Island last week have led to supply disruptions in several major companies, including Toyota Motor Corp and Honda Motor Co.

According to AmInvestment Bank Bhd’s research arm (AmInvestment Research) noted that Toyota has suspended most of its production in plants across Japan due to a shortage of auto parts from its suppliers, according to various news reports.

The company’s value chain reflects a ‘just in time’ philosophy that avoids hoarding inventory, as is the case with Aisin Seiki.

According to Reuters, Aisin Seiki is a Toyota affiliate which supplies parts such as semiconductors and door handles, it does not hold inventory beyond that which is required for a short period of one week to a month.

UMW Holdings Bhd (UMW) distributes Toyota in Malaysia via UMW Toyota Motor Sdn Bhd, a 51 per cent unit, with the remainder held by Toyota Motor Corp (39 per cent) and Toyota Tsusho Corp (10 per cent), the trading arm of Toyota.

UMW management said that Toyota Motor Corp will suspend production in several plants and in stages, between April 18 and 23. UMW does not expect to see any impact to Malaysia due to the short disruption.

“Details on which plants were affected were not disclosed by Toyota, but UMW said some of the affected plants supply CKD components to Malaysia. A major or prolonged disruption to production in Japan could therefore have an adverse impact on UMW.

“We maintain our numbers for UMW, premised on sales of 85,000 Toyota cars this year as per guidance from the company.

“This would be a 9.3 per cent on year drop. Sales for Toyota declined sharply in the first two months of the year after price hikes of three to eight per cent were implemented from January to cope with forex,” noted the research house.

UMW’s main exposure to Japan is the 15 per cent in components it imports from the country. This partly stems from Toyota’s focus to retain a higher portion of production in Japan.

Toyota produced 40 per cent of its global output last year in Japan, reported Bloobmerg, compared to 17 per cent for Nissan and 16 per cent for Honda.

 

Mukah Pages sharing local news with BorneoPost Online | Borneo , Malaysia, Sarawak Daily News http://ift.tt/1Sk7rKX