Japan Earthquake: Toyota is the most affected automaker – output image

Toyota Motor Corp. (7203), the world’s biggest carmaker has said that its Japanese production fell by 63% in March compared with the same month last year – and the production cuts may continue.

Domestic output slumped to 129,491 vehicles, which Kyodo News agency said was the lowest since records began in January 1976.

Toyota’s worldwide production fell 29.9 percent to 542,465 vehicles while output at its Daihatsu and Hino subsidiaries was also sharply lower.

“The impact of the tsunami disaster on Toyota is extremely severe,” said Mamoru Kato, an analyst at Tokai-Tokyo Securities. “Since Toyota depends so much on domestic parts suppliers, any major disruptions in supply chains could cripple its output.”

Kato said Toyota could suffer a net loss of 1 trillion yen ($12.2 billion) in the April-June quarter and a net loss of 500 billion yen in the July-September quarter.

Japan’s auto sector has been hit hard by the disaster due to a shortage mostly of electronic and resin-based parts in the wake of the magnitude-9.0 earthquake and resulting tsunami, as well as damage to a major nuclear plant, which disrupted power supplies.

Similarly the nation’s No. 2 automaker, Honda Motor Co. saw its output in March plunge 62.9 percent from a year earlier to a record low of 34,754 units produced.

Despite the tragic event that took place in March, Japan still remains a key source of Toyota’s materials, with other suppliers chipping in as mere substitutes. It is also interesting to note that despite a few hiccups in assembling the main parts, replacement parts for service and repair are available aplenty.