Toyota Motor Corp. is extending shutdowns at its North American plants caused by a shortage of parts from Japan and its Canadian arm warned for the first time of a potential shortage of some vehicles in Canada this summer.
The auto maker will close its two Canadian assembly plants the week of May 23 and its U.S. plants the week of May 30 - four-day shutdowns because of holidays in each country - on top of shutdowns already announced for April 15-25. On days when the plants are operating, they will run at 50 per cent of capacity.
Toyota is experiencing a shortage of parts after the March earthquake and tsunami that devastated parts of northern Japan and led to a crisis at a nuclear power plant that is affecting power supplies in the rest of the country.
Output of Corolla, Matrix and Lexus RX350 vehicles at Toyota Motor Manufacturing Canada Inc. in Cambridge, Ont., will be halted, as will assembly of RAV4 crossover utility vehicles at a plant in Woodstock, Ont.
"We have inventory to meet the needs of the Canadian vehicle-buying public, however recent production announcements raise the possibility that vehicle supply could be temporarily impacted this summer," Toyota Canada Inc. managing director Tony Wearing said in a memo to dealers Tuesday.
Bob Carter, head of sales for the Toyota division of Toyota Motor Sales USA, said in New York Tuesday that the company may have to reduce its sales targets because of the slowdowns.
Japan-based auto makers have trimmed production in their home country as well as plants in North America and Europe because of the parts shortage, which has also affected other vehicle companies that depend on supplies of some parts from Japan. Semiconductors in particular are in short supply.
The production cuts come as gasoline prices soar in both the U.S. and Canadian markets and U.S. drivers turn toward smaller cars as a result. Gas is higher than $4 (U.S.) a gallon in several states and approaching that level in others. Smaller cars such as the Toyota Corolla and Honda Civic compacts are traditionally a strength and are the most popular vehicles in their segment in the U.S. market.
Overall North American vehicle production rose 17 per cent in the first quarter from year-earlier levels amid a steady improvement in sales since the auto crisis of 2008-09.
"The industry is now facing its first real challenge since the recession, as potential widespread parts shortages could have a profound impact on the pace of the recovery," John Humphrey, senior vice-president of automotive operations at consulting firm J.D. Power and Associates, said in a statement Tuesday.
Inventories are in good shape at about 54 days supply at the end of March, but smaller cars and many models imported from Japan are in shorter supply, added Jeff Schuster, the consulting firm's executive director of global forecasting.
"The supply side of the industry is just now starting to see the effects of the parts shortage and is bracing for additional production losses during the next quarter, with volume through June expected to be down nearly 200,000 units from the previous forecast of 3.3 million units for the second quarter," Mr. Schuster said.
With files from Reuters