The Japanese crisis dealt a severe blow to automakers around the world. Factories in Japan had to be shut down, leading to parts shortages across the world and hampered production. The greatest impact was felt at home as Japanese automakers were forced to make significant cuts to production in the first quarter.
In an earlier article, I touched upon how Japanese automakers might struggle after the quake. The impact of the crisis was visible as Japan's leading automaker Toyota's
The road to recovery
Although the crisis in Japan happened only a few weeks before the quarter ended, the impact was huge as parts suppliers in Japan were all but wiped out, halting production out of Japan. The impact was such that the operating income fell by over half a billion in the quarter.
Toyota was slowly and steadily recovering from the massive recalls as it nearly doubled its yearly earnings but the quake put its production schedule off track. Toyota has since managed to ramp up production, sooner than expected. However, it shied away from forecasting anything about the future, at least until production was stable again. Toyota missed production on close to 900,000 vehicles, both in Japan and overseas, with production dropping almost 50% post the quake.
There is some positive news ahead for Toyota. The automaker plans to restore close to 70% of its production by June, two months earlier than what it had initially predicted. In North America, it was operating at only 30% of its total capacity, in an effort to save parts, due to the shortages.
Hopefully, Toyota can return back to full capacity in order to take advantage of the surge in demand for more fuel efficient cars, following the oil price surge. Its U.S. rivals Ford
Before the crisis, Toyota and Honda's hybrids were in great demand, especially Toyota's popular Prius. If Toyota can get back to full production or at least somewhere close to that, it would be able to satiate the high demand for fuel-efficient vehicles. Returning to normal production levels will come as good new for auto parts complementors such as Goodyear
The Foolish bottom line
Toyota has had a tough start to the year. Hopefully, with its recovery back on track, it can hope for a better year ahead. But only time will tell how well and how swiftly it would be able to improve its numbers.
Shubh Datta doesn't own any shares in the companies mentioned above. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended Ford Motor and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.