Toy­ota to restart out­put in Tian­jin

China Daily (Canada) - - BUSINESS - By BLOOMBERG

Toy­otaMo­tor Corp is be­gin­ning trial pro­duc­tion of cars at its China plants that were shut af­ter ex­plo­sions in Tian­jin, the first step in re­open­ing the fa­cil­i­ties fol­low­ing a two-week clo­sure, peo­ple fa­mil­iar with the mat­ter said.

Work­ers have re­turned to the plants and Toy­ota is pre­par­ing to re­sume out­put on a trial ba­sis be­fore mak­ing a de­ci­sion this week on whether to re­sume full pro­duc­tion, said the sources, who asked not to be named dis­cussing pri­vate plans. A test run of about 100 cars will start on Wed­nes­day, one of the sources said.

Pro­duc­tion has been shut down at Tian­jin FAW Toy­ota Mo­tor Co, the Ja­panese car­maker’s lo­cal af­fil­i­ate, since the Aug 12 blasts at a chem­i­cal stor­age site in the north­ern Chi­nese port city. The ex­plo­sions killed at least 135 peo­ple and in­jured 67 Toy­ota work­ers who live in the area. About 4,700 Toy­ota and Lexus ve­hi­cles were also dam­aged.

Toy­ota has not made a de­ci­sion yet on when it will restart pro­duc­tion, said Ryo Sakai, a com­pany spokesman. The car­maker has said its lo­cal oper­a­tions will restart once it is able to con­firm the safety of its fa­cil­i­ties and the sur­round­ing ar­eas.

The Tian­jin dis­as­ter took a broader toll on the auto in­dus­try, dam­ag­ing 2,700 Volk­swa­gen AG ve­hi­cles, shut­ting a nearby Hyundai Mo­tor Co lo­gis­tics cen­ter and forc­ing Fuji Heavy In­dus­tries Ltd to di­vert car ship­ments to Shang­hai. The ware­house that ex­ploded stored about 1,300 met­ric tons of ox­ide com­pounds, the Xin­hua News Agency re­ported, cit­ing Tian­jin Vice-May­orHe Shushan.

The value of Toy­ota’s lost out­put may be more than 660 mil­lion yuan ($103 mil­lion) a week, ac­cord­ing to a Bloomberg cal­cu­la­tion. Tian­jin FAW Toy­ota built about 26,300 ve­hi­cles a month through July, ac­cord­ing to fig­ures from re­searcher LMC Automotive. As­sum­ing the cars are sold at base prices, the value of that monthly pro­duc­tion is about 2.83 bil­lion yuan.

The cal­cu­la­tion is based on the start­ing prices and av­er­age monthly out­put for each of the mod­els Tian­jin FAW Toy­ota makes, rang­ing from the 69,800 yuan Vios sedan to the 264,800 yuan Crown.

The af­fil­i­ate built about 440,000 Crown, Reiz, Corolla and Vios cars last year, al­most half of Toy­ota’s an­nual ve­hi­cle out­put in China.

Toy­ota can­not com­ment on the value of the lost out­put, said Nick Max­field, a spokesman for the com­pany.

“The end re­sult will de­pend on whether or not ad­just­ments are made to re­cover lost pro­duc­tion,” Max­field said. “Sim­i­larly, lost sales will de­pend on the amount of in­ven­tory cur­rently at deal­er­ships.”

YUE YUEWEI / XIN­HUA

An assem­bly line at Tian­jin FAW Toy­ota Mo­tor Co. The af­fil­i­ate built about 440,000 cars last year, al­most half of Toy­ota’s an­nual ve­hi­cle out­put in China.

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