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Toyota to cut China output by 50-70% until June 3
by Staff Writers
Tokyo (AFP) April 20, 2011


Brazil, Ferrari boost Fiat profits but Japan fallout looms
Milan (AFP) April 20, 2011 - The Brazilian market and Ferrari sales boosted first-quarter results for Italy's Fiat but the company said Wednesday the disaster in Japan would take a 100 million euro chunk out of profits this year. Net profit came to 37 million euros ($54 million) compared with 13 million euros in the same period last year but came in well below the expectation of analysts polled by Dow Jones Newswires who had forecast 91 million euros. Fiat chief executive Sergio Marchionne said that the financial impact of the earthquake and tsunami on the company would be "about 100 million" euros this year but that this would not affect financial forecasts for 2011.

"We can absorb it without revision of our forecast," he said, after Fiat confirmed its financial targets for this year with trading profit of between 900 million euros and 1.2 billion euros and net profit of 300 million euros. In a presentation of its earnings, Fiat also said that production in Europe this year would be reduced by up to 100,000 units -- mainly over the second and third quarters because of the disaster's impact on the auto parts market. The crisis will stop affecting production by the fourth quarter, Fiat said. Fiat last year sold more than a million cars in Europe. The loss of production will therefore hit at most 10 percent of European sales.

Many car manufacturers have been hit by the disaster in Japan. Earlier on Wednesday, France's Peugeot said the disaster in Japan could have an impact of around 150 million euros on its earnings. Japan's Toyota, the top producer in the world, also said it would have to lower its production in China because of a lack of car parts. Chrysler, General Motors, Honda and Nissan have all also been affected. Fiat said its first-quarter results were boosted by luxury brands Ferrari and Maserati, as well as Fiat's car parts division.

The best-performing market was Brazil, where the number of vehicles sold rose by eight percent over the year. But the Fiat, Lancia and Alfa Romeo brands were down largely because of a plunge in European car sales due to the economic crisis. The group's current profit rose 9.1 percent to 251 million euros over the 12 months, and turnover advanced 7.1 percent to 9.21 billion euros. Also on Wednesday, Marchionne said that a public listing of Ferrari was still an "option" but not "necessary" at the moment. "It continues to be an option for this group that it may exercise at the relevant time," Marchionne told financial analysts. "Fiat today does not require the liquidity," he said.

Toyota said on Wednesday it will reduce auto production at its Chinese plants by 50-70 percent until June 3, citing a parts shortage after Japan's earthquake and tsunami disaster.

Toyota previously announced production disruptions domestically and in the United States, European Union and Australia because of the crisis.

As a result of the March 11 tragedy, Toyota said "it has decided that vehicle production in China will be carried out at 30 percent to 50 percent of normal from April 21 through June 3 due to parts supply difficulties."

A Toyota spokesman in Japan said the slowdown would bring a production shortfall of about 80,000 vehicles during the period.

"As we are producing, we are keeping a careful eye on the parts situation," said Toyota spokesman Paul Nolasco. "We are doing the best we can to return the situation back to normal as soon as possible."

The total production shortfall for North America, Europe, Japan and China until June 3 will now come to 540,000 units, said Nolasco, excluding data for Australia, the Middle East and South America.

The 2011 global production target before the quake was 7.7 million units.

Toyota's announcement came on the day Japan said its trade surplus slumped almost 80 percent in March, the first drop in 16 months, because of the impact of last month's earthquake-tsunami.

The China slowdown starts Thursday, and "a decision on production after June 3 will depend on the parts-supply situation," said Toyota in a statement.

Many key component manufacturers in Japan are based in the worst-hit northeastern regions, where facilities were damaged by the 9.0-magnitude earthquake or inundated by the giant wave that followed.

Toyota president and chief executive officer Akio Toyoda said at the Shanghai auto show that "due to the situation in Japan, I hesitated to come to China right up until the last minute."

The supply shortages have had a ripple effect across the global auto industry, with companies shutting plants or slowing production in Britain, the United States, Turkey, France, Australia, Poland and the Philippines.

Toyota on Tuesday extended production cuts at its North American plants, a day after resuming production at all of its Japanese plants, though at a sharply reduced volume.

Toyota in the United States said it would continue to suspend operations on Mondays and Fridays through June 3 and would run production at half of normal levels on Tuesdays, Wednesday and Thursdays.

It will also suspend US operations for the week of May 30 -- in conjunction with the Memorial Day holiday -- and will suspend Canadian operations the week of May 23 in conjunction with the Victoria Day holiday.

Toyota on Monday resumed operations at all its domestic plants, with production volume still at around 50 percent due to a parts shortage.

Amid Japan's ongoing nuclear crisis, the auto giant said it had begun measuring the radiation levels of its export vehicles, parts for overseas assembly and service parts and found no abnormalities.

Japan's biggest ever quake and the tsunami it unleashed shattered supply chains and crippled electricity-generating facilities, including the stricken Fukushima Daiichi nuclear power plant.

burs-fz/dan

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