Skip to content

Toyota’s Japan production plans for May and early June 2011, as U.S. sales prices are poised to rise

The last time we checked in on Toyota, Scion and Lexus’ Japan production schedule, the plan was set until the end of the traditional annual Golden Week holiday date of Monday 9 May. On Friday 15 April, however, Toyota announced via both its USA and Global Newsrooms that production will resume at all of Toyota’s Japanese carmaking facilities on Tuesday 10 May and continue until Friday 3 June. An important caveat, however, is that “production will proceed at approximately 50% of normal”, as it will be since the broad-based start of production today (Monday 18 April). Reuters estimates that this will cost Toyota an additional 120,000 production units on top of its previously-published calculation of 260,000 lost units through Friday 8 April. Plans beyond June 3 will be determined based on parts availability, since, as Toyota spokeswoman Shiori Hashimoto reminds us, the company is still having trouble procuring about 150 parts, primarily microconductors made by Renesas Electronics. Toyota’s schedule was very aptly summed up by Bertel Schmitt of The Truth About Cars as follows:

Basically, Toyota will open all its Japanese vehicle-production plants on Monday, April 18, and will run them on half steam until April 27. Then, Toyota will take the annual spring holiday a day earlier and close on April 28th. Toyota will extend the holiday for another full day and will start working on May 10. One day of these extended holidays was planned, the other was not. Production will then continue at 50 percent capacity through June 3. Which does not mean that all will return to normal in June…Once June comes around, Toyota will have had lost approximately half of its Japanese production in March, about two thirds in April, and half in May. Overseas shipments of cars and parts needed for overseas production will continue to suffer well into the summer.

Since Japan’s earthquakes and tsunami first walloped the country on Friday 11 March, it has been quite rare for a Kaizen Factor update not to include a mention of at least one country in the far-flung Toyota manufacturing empire slowing or temporarily shutting down a production facility, and this one is no exception. On Thursday 14 April, the Toyota Australia Newsroom informed us that, during May and, most likely, into June, the carmaker’s Altona facility in Victoria state will build Camry, Camry Hybrid and Aurion (a V6 Camry) models at approximately 50% of normal capacity, with May expected to see roughly 9600 units of the 3 models. From 9 May manufacturing plant team members will work half day shifts involving vehicle production and, where possible, training and plant improvement activities. Toyota Australia’s Executive Director of Manufacturing Chris Harrod said: “It is important to note that this is a necessary response to a short term supply issue and we intend to resume 100 per cent vehicle production as quickly as possible.”

Reuters also notes that Toyota’s Philippines factory at Santa Rosa City in Laguna province, which builds the Innova (a minivan variant of the IMV [Innovative International Multi-purpose vehicle] Third-World project and the country’s best-selling vehicle) and Vios (the current Toyota Belta/Yaris sedan) models, will be stretching its scheduled two-day Easter holiday into a five-day break by halting production for three days from Monday 18 April. The cause is given as the now-familiar shortage of car parts sourced from disaster-stricken Japan. A separate Reuters report also cites concerns that output at Toyota’s Chinese Guangzhou Automobile Group joint venture, while normal during April, would be more uncertain for May.

Back in Japan, a Bloomberg article by Makiko Kitamura and Yuki Hagiwara reports on a move that may seem somewhere between counterintuitive and insane to some: the expansion of Toyota’s manufacturing presence in the nation’s devastated Miyagi prefecture. Currently the home to the Central Motor Company facility that started building the Yaris just last January, it promises to be joined by additional Toyota facilities, as these excerpts from the Bloomberg article inform us:

Toyota Motor Corp., the automaker most affected by Japan’s record earthquake, plans to build an engine plant in the nation’s devastated Miyagi prefecture and will move a subsidiary’s production operations to the region.

Toyota Motor Tohoku Corp., a wholly owned subsidiary of the automaker, will start building the new engine plant within a few years in Miyagi prefecture as car production ramps up at auto plants owned by the carmaker in Ohira, Miyagi and nearby Iwate prefecture, said Managing Director Kozo Sakurai.

“This kind of disaster occurs only once in a thousand years,” Sakurai said in an interview last week at Toyota Tohoku’s plant in Taiwa, Miyagi, which makes anti-lock brake systems, axles and suspensions. “Earthquake risk is now higher for regions that haven’t yet been hit, so this is actually a chance for the Miyagi region.”

Toyota Tohoku already secured 324,000 square meters (3.5 million square feet) of land in April 2008 adjacent to the Taiwa plant to build 200,000 engines for compact cars a year, according to Sakurai and Miyagi prefecture.

Central Motor will begin transferring a factory from Kanagawa prefecture near Tokyo, which will be shut, to Ohira by the end of April, a month later than originally planned, (Central Motor’s Makoto) Moriya said. About 400 workers in Kanagawa will join 900 employees already in Ohira. Plans to add Corolla production at the plant are unchanged, he said.

Toyota suppliers have also built new factories in and around Ohira. Affiliate Toyota Boshoku Corp. began production of seats at a plant across the street from Central Motor last quarter. Primearth EV Energy Co., a joint venture between Toyota and Panasonic Corp., started producing batteries for hybrid cars at a new plant in Taiwa in January 2010.

Toyota, which began diversifying its production base in Aichi prefecture in central Japan in the late 1980s to Kyushu in the south and Hokkaido in the north, wants to increase sourcing from more suppliers in the Tohoku region to ease logistics issues, Sakurai said.

Manufacturing makes up about 12 percent of Miyagi’s economy, according to Governor Yoshihiro Murai. He had aimed to increase that ratio to 20 percent as a declining population and e-commerce undercut service industries, which account for 80 percent of the economy, he said in an interview in February.

“I am very grateful that none of the companies here in Miyagi or those that were planning to move to Miyagi have pulled out since the earthquake,” Murai said in an interview at his office in Sendai on April 12.

Before March 11, Miyagi had been in talks with five other auto parts suppliers considering setting up factories in the prefecture. While those talks have been put on hold they are likely to resume in a few months, Murai said.

“The Tohoku region has a very high-quality labor force,” Sakurai said. “We definitely want to forge more ties with the local supply base.”

Wouldn’t building vehicles relatively closer to the afflicted Fukushima Dai-Ichi nuclear plant mean the mass exportation of radioactive cars? While the Chicken Littles and dramamongers of the world would certainly fear and believe that, a new press release from the Toyota Global Newsroom addresses this issue, and reads as follows:

Regarding Measurement of Radiation Levels

Toyota Motor Corporation (TMC)—for the safety and peace of mind of its customers and other concerned parties—has started measuring the radiation levels of its export vehicles, parts for overseas assembly and service parts. As a result, it has found that such radiation levels are no different than that of the surrounding air, meaning there is no danger to human health.

These findings are reflected in the Japan Automobile Manufacturers Association (JAMA) announcement today that atmospheric radiation at the production sites and ports of shipment used by JAMA member companies is not high enough to impact human health. JAMA also said that radiation around vehicles was at the same low level, and it said it was confident users of vehicles produced in Japan could use such products with no concerns regarding radiation.

TMC will continue to work with JAMA to provide customer peace of mind.

The Truth About Cars adds that each carmaker tests about 10 vehicles per ship (out of a typical load of 5000 vehicles) for radiation.

Across the Pacific, United States Toyota and Lexus buyers will see rising prices versus last week, and they have nothing to do with the official MSRP increases Toyota announced on March 31st. Rather, The Car Connection cites pricing-intelligence firm TrueCar as anticipating that a good number of Lexus and Toyota models would see a sales transaction price increase of $100 or more between Tuesday 12 April and Tuesday 19 April due to diminishing supply in the face of steady-to-increasing demand. Here’s their list, with additional pricing information on certain models:

Lexus HS 250h. Pricing predicted to be $599 (or 1.6%) higher on average
Lexus IS (all variants)
Lexus ES 350
Lexus GS 450h / GS 460
. The GS 450h, in particular, is predicted to see a $560 (nearly 1%) jump.
Lexus LS 460
Lexus RX (all variants)
. The RX 450h, in particular, is predicted to see a $757 (or 1.5%) jump.
Lexus LX 570
Toyota Prius
. In the 5 weeks since the earthquake, the Prius has gone from selling for $300 under dealer invoice to at or slightly over MSRP. That’s a price hike of nearly $2000, and considering what TrueCar expects in the next week, will reflect a rise in transaction prices of nearly 10% since the quake.
Toyota Camry Hybrid. Prices are expected to go up 1.5% versus this past week.
Toyota Land Cruiser

In contrast, Edmunds Auto Observer reports far less dramatic and eye-popping price increases, with word of first week of March to the first week of April transaction price increases for the Toyota Prius of $500 (and a $1,000 jump since the first week of January), and Toyota Camry Hybrid pricing up about $500 over the last month. On average, Lexus average transaction prices jumped $130, while the Toyota brand’s increased by about $70. Scion vehicle sale pricing rose about $150 during the past month, or an average of 100.2% of MSRP from 99.4% during the first week of March. Edmunds also informs us that the auto industry’s overall “days to turn”, ideally a 60-day supply, has dipped lower than that for a number of car brands. For Toyota, it dipped to 60 from 71, while Scion saw a huge drop to 80-plus from a 120 day supply. An Automotive News story contains a number of informative passages that cite a couple of Toyota dealers’ predictions for May and June:

“We’re going to get basically nothing,” said Bob Page, owner of Page Toyota in Southfield, Mich. “Whatever inventory we have, let’s say it carries us 60 days. We’ll be pretty much out of product at the end of May.”

Meanwhile, Toyota and Honda dealers are seeing May vehicle shipments canceled as the automakers grapple with a shrinking pipeline of new vehicles.

Page said Toyota canceled his region’s first shipment of cars to be delivered in May. For the second half of May, Page said his region, which includes Michigan, Ohio, Kentucky and Tennessee, will only see about 400 to 600 new vehicles, compared with the usual 2,000 to 3,000 vehicles units per allocation.

“There’s no doubt that June is going to be a very, very tough month,” he said. “Unless they somehow get a lot of product for May allocation and June arrival, we’re not going to see much activity as far as cars.”

David Wittenmyer, general manager of Jim White Toyota in Toledo, Ohio, said he will get only a small number of Priuses, Venzas and Avalons in late May.

He said he has only 200 vehicles on the lot, in port and in transit, down from the usual 300.

Wittenmyer expects strong sales this month and next, “but I don’t know what happens in June,” he said.

Photo Credit: Reuters/Yukiro Nakao

Published inJapan Earthquake & Tsunami 2011 aftermathLexusScionToyota


Leave a Reply