Carmakers Experience Woes Due to Production Delays

Toyota (NYSE:TM) reported an 19% plunge in its fiscal second-quarter profit to $1 billion, and more important, the company said its situation now is too uncertain to give forecasts for its full fiscal year ending in March 2012. Toyota’s overall sales worldwide in the quarter were down 5% from a year ago to $58.7 billion. Toyota was the world’s biggest automaker in sales last year, but is running No. 3 in 2011, behind General Motors and Volkswagen.

The company said production and sales have taken a one-two punch from parts shortages initially caused by the March tsunami in Japan and presently by the flooding in Thailand. Just as Toyota’s production was recovering from shortages due to the earthquake and tsunami in March, its global output was crimped by component shortages from the massive flooding in Thailand, where it builds parts and some autos for export. The company said it will update its outlook once the full impact of the production disruptions becomes clear.

Profits also have been compromised by the rise in the yen, with Toyota President Akio Toyoda stating that the yen was at levels that threaten to make it necessary to move production out of Japan. He warned that unless the dollar rose against the yen, manufacturing in Japan would be “destroyed.”According to AP, Toyota had counted on a dollar worth 86 yen last year, but now is seeing it slip to 78 yen, which Toyota says has erased $1 billion from its latest quarterly net income.

Japanese car makers have been waging a desperate battle with the stubbornly strong yen, scrambling to cut costs and, in some cases, shift more production overseas. A stronger yen bites into income earned overseas and erodes the price competitiveness of exports. The company had hoped to ramp up production in the back half of the year to make up for losses after the historic earthquake and tsunami, But the elevated yen and flooding in Thailand have frustrated those plans. It is now unclear how much of that production Toyota will be able to reinstate by year’s end.

Honda Motor Co. (NYSE:HMC), Ford Motor Co. (NYSE:F), computer chip and disk-drive makers trimmed production after flooding swamped Thai factories and key suppliers. Honda, which withdrew its earnings outlook last week on the flooding impact, said on Tuesday that its North American factories will operate at between 50% and 75% of normal output for about three more weeks.

Nissan Chief Operating Officer Toshiyuki Shiga said last week the company aims to resume part of its production in Thailand on Nov. 14 by using parts from other countries. Nissan (PINK:NSANY) estimates a production loss totaling 40,000 vehicles in Thailand and an additional 20,000 vehicles in Japan.