Japan Quake Effects Still Reverberating

Toyota factory

While Nissan crowed about returning to profit in its fiscal fourth quarter, Honda dropped 38 percent. The big loser, however, was Toyota, whose net income dropped 77 percent amid various halts in production. The company admits to 170,000 units of lost sales.

When first-quarter results for this year come in, Toyota could well fall to third place behind General Motors and Volkswagen. The company’s production is running about 50 percent of normal globally and 30 percent in North America. A strong yen has made things worse.

On the other hand, numbers for the 2010 fiscal year showed Toyota very much rebounding from the recall crisis, particularly in the North American market.

If you’re reading the news, you know that the damaged supply chains have been coming back to life, but the power-generating situation is still critical, with terrible news about the nuclear plant at Fukushima still proliferating.

While much of the disaster’s $300 billion cost will be contained in Japan, the globalized auto industry has been and will continue to be affected.

General Motors, getting about 15 percent of its parts from Japan, weathered the supply-chain storm surprisingly well. It set up a crisis team to monitor and manage the disruption, and reports that of 118 products with supply problems, it has resolved all but 5.

Chrysler, on the other hand, has had to advance its summer factory shutdown schedule and cancel overtime in its Mexico facility. The move will conserve parts from Japan used in producing Ram trucks and various SUVs.

As most of you know, inventories of Toyota cars are generally tight, and supplies of the Prius, for instance, are dropping fast. While the immediate beneficiaries are Hyundai and Kia, in the long term (which may be shorter than you think) Toyota will bounce back and regain market share.

Do you think Toyota will finally resume its place as the world’s largest auto company?

—jgoods

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1 Comment

  1. It’s amazing to think how hard American car companies had to work over the years to earn the ill will they have in the market place. They had to screw literally millions of customers, some more than one time, to create a large body of people that will never buy an American nameplate car again. Ironically, the early Japanese and Korean imports were just as bad or worse, and brands like Honda and Mazda earned bad reps for rotting bodies, exploding engines and just plain poor quality. Of course, the Japanese turned that trend around much sooner than the Americans, and enjoy the results of their labors. At least until Toyota got to supercompany volumes and forgot the quality lessions that put them on top. Difference is that while Toyota has had a lapse of a year or two, their competition put out crap for decades. That means Toyota will recover their reputation and sales much faster, but I admit that I won’t be a potential customers. I’ll always have the nagging feeling that they are taking shortcuts here and there. Remember the Avis slogan “we try harder” ? That’s always the company to look for, the one that’s behind and trying harder than the big guy. Right now that’s the Koreans led by Huyundai. Big companies like GM are trying to sucker you when they claim to try harder. Their business is run on numbers, and they are still out there trying to save $1 on a $50 part rather than being concerned with total quality. That’s why they will rarely come out on top.

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