Wall Street Journal: Toyota Says Vehicle Shortage Could Linger

DETROIT—Toyota Motor Corp. has warned its U.S. dealers that the company's supply of new vehicles could become "significantly impacted" by the summer, according to a memo distributed Sunday.
The memo is the clearest statement by Toyota that the shortage caused by the March 11 earthquake and tsunami in Japan will last into the third quarter.
The Japanese auto maker also outlined supply issues and further cuts in production stemming from the disaster, which has shut down many suppliers and forced Toyota to halt production in Japan for nearly a month.
"What we don't know are vehicle production levels for May through July," Bob Carter, head of the company's Toyota brand in the U.S., wrote in the memo. "The potential exists that supply of new vehicles could be significantly impacted this summer."
Toyota spokesman Mike Goss declined to comment specifically on the memo, but said it was too early to say how badly the summer supply of vehicles would be affected. "It's still too early for us to say precisely," he said. "We just don't know yet the full picture."

The memo, a copy of which was reviewed by The Wall Street Journal, also said the auto maker's North American plants will take an "extended Easter break" that will idle them on April 21, 22 and 25. Toyota's North American plants are already operating on a reduced schedule, and also will be idle on April 15 and 18.
Mr. Carter said parts shortages are the reason for the extended holiday break in North America. A decision regarding whether to go back to the reduced schedule of idling the plants two days each week "will be made at a later date once the parts pipeline has been determined," he wrote in the memo.
The memo also said Toyota is changing the colors of exterior paints it offers because of a shortage of a chemical used in certain paints. The plant in Japan where the paints are made was severely damaged in the March 11 quake. Ships carrying new vehicles will leave Japan every two weeks and make stops at six ports to speed exports to North America, Mr. Carter said.
The effect is that dealers will be getting cars in smaller batches more often than under normal circumstances. Mr. Carter added that Toyota currently has an inventory of about 300,000 cars and trucks in the U.S., and said the company had just 72,000 cars and trucks on dealer lots after the so-called cash-for-clunkers rebates program ended in September 2009. Last month, the company sold about 176,000 vehicles in the U.S.
"Today we have good levels of inventory, but inventory will be getting tighter," the memo said. "Toyota will be producing new vehicles at significantly reduced levels."
Mr. Carter also said Toyota has been able to produce replacement parts at a level high enough to prevent most shortages at U.S. dealers. A few weeks ago, the company put restrictions on the ordering of 233 different replacement parts available to dealers.
Honda Motor Co., which has been limiting production at its U.S. plants to about 50% of normal volumes, extended the slowdown through April 22, varying the production output from plant to plant based on the parts that are available, according to a memo that was sent by Executive Vice President John Mendel and also reviewed by the Journal.
Nissan Motor Co. also stopped production at its North American plants several days this month to conserve parts.