Toyota Motor Corp shares suffered their biggest drop in three weeks, after the company cut its production forecast for the fiscal year by about 300,000 vehicles, as the spread of the Corona virus in Southeast Asia affects its ability to supply chips and other essential parts.
According to Arab Net, the world's largest automaker said on Friday that it will adjust production in September and October and expects to produce 9 million cars in the fiscal year through March, a decrease from the 9.3 million it had previously expected. The company did not change its operating profit forecast for this year of 2.5 trillion yen ($22.8 billion).
Toyota shares fell as much as 2.5% in early trading in Tokyo on Monday, their biggest drop since August 20 on a daily basis. The stock has risen more than 20% this year.
Toyota warned last month of cuts as Covid-19 spread to its core manufacturing region in Southeast Asia, and closed its suppliers' factories in countries such as Malaysia and Vietnam. This announcement surprised the market, as Toyota had until then largely been spared from the lack of spare parts plaguing its peers.
The question remains how the supply crises in Southeast Asia will affect other Japanese manufacturers such as Mitsubishi Motors, Honda Motor and Nissan Motor that have similar production centers in the region.
Toyota's latest announcement was a wake-up call, Jefferies analyst Takaaki Nakanishi wrote in a note. He said: This problem is not limited to Toyota, but extends to global OEMs.
Jefferies now expects Japanese automakers to cut production by 1.3 million units in the July-September quarter, up from the 760,000 units it forecast last month.
