Toyota set to dodge earnings nightmare caused by chips crisis

Japan Times -- May 12
Investors should see two scenarios playing out among automakers in Japan this week as the nation’s biggest car manufacturers report their financial results.

On one side is Toyota Motor Corp. which, thanks to its forward supply-chain planning, has weathered the pandemic relatively well. On the other, everyone else, mired in a morass of factory closures due to the global chip shortage.

"There will likely be winners and losers, depending on their inventories,” said Nakanishi Research Institute’s Takaki Nakanishi. Already that bifurcation can be seen in the U.S. between General Motors Co. and Ford Motor Co., which sees a $2.5 billion chip-shortage cost, he said. GM meanwhile left its full-year outlook unchanged earlier this month.

Like automakers in other countries, Japanese firms have been hurt by a reduction in consumer demand as a result of COVID-19, although car sales picked up as the year progressed. What’s really hurting is the widespread shortage of semiconductors, caused by a surge in demand for the chips used in electronic devices like laptops, mobile phones and games consoles.

As the consumer devices sector sucked up inventories, many carmakers were left empty handed, sparking wave after wave of production line stoppages. A fire at Renesas Electronics Corp.’s automotive chip plant in Japan and winter storms in Texas only made matters worse.

Toyota, which owns around 3% of Renesas and is one of the company’s largest customers, even sent workers to its Naka plant in eastern Japan in an attempt to keep its own supply chain alive. "Renesas largely owes Toyota” because Toyota supported the chipmaker after Japan’s 2011 earthquake and the recent fire, said Takeshi Miyao, an analyst at Carnorama. "In a way, it has an obligation.”

- Japan Times