IHS Automotive estimates a production loss of 2,200 cars per day at Toyota's plants as a result of the explosions in the port of Tianjin, China.
IHS Automotive perspective | |
Significance | The twin giant blasts in Tianjin have forced Toyota to halt production at two of its Chinese plants. Meanwhile, Mitsubishi said 600 of its vehicles could have been damaged as a result of the explosions. |
Implications | According to IHS Automotive estimates, Toyota produced a total of 432,340 units at the twin plants in 2014. We estimate a production loss of 2,200 cars per day at the automaker's plants. |
Outlook | Some automakers have started alternative route scheduling for vehicle shipments, while more are likely to do so going forward. It is expected to take couple of months before the port's operations revert to normal. |
More concrete details in the aftermath of the twin giant explosions in Tianjin on 12 August are surfacing now, with Toyota stating it will keep production lines at two facilities for three days. The Japanese automaker – which operates in the country through a joint venture with FAW Group – said its plant will remain closed through Wednesday (19 August) as a result of evacuation advisories in the area, reports Dow Jones Newswires, citing a company spokesperson. Apart from the Tianjin TEDA plant, production at Toyota's Xiqing plant will also remain down for this period. The Xiqing plant is also based in Tianjin but nearly 70 kilometres away from the TEDA facility, which supplies components to the former. The three production lines at the two plants produce the Corolla and Vios sedans.
At the time of the blasts at the northern Chinese port, both plants were closed for a week-long summer holiday, with production due to start on Sunday. "We have now heard that over 50 employees who live in the surrounding area... have been injured, but we are still verifying the details regarding the number of employees injured and the extent of the injuries," a Toyota spokesperson in Tokyo said, reports Agence France-Presse (AFP). The spokesperson added, "We can confirm that no deaths have been reported." Without sharing a figure, the automaker said some of its vehicles were affected by the blasts. "In our current view, the damage isn't that severe," a Beijing-based Toyota spokesperson said earlier.
Meanwhile, Mitsubishi Motors said nearly 600 of its imported cars may have been damaged as a result of the blasts. A Reuters report cited the automaker's Chinese sales subsidiary as saying that it had no means to confirm the damage at the moment. Mitsubishi Motor Sales (China) Co Ltd said it has directed future vehicle imports to be routed through the ports of Shanghai and Dalian.
Outlook and implications
Toyota produced a total of 432,340 units at the twin plants in 2014, according to IHS Automotive estimates. Apart from Corolla and Vios, the Crown Royal and Reiz sedans are the other models produced by Toyota at the Tianjin plants. While the current impact of the blasts is limited to the Corolla and Vios sedans, the Crown Royal and Reiz models are also likely to be affected going forward, according to Mark Fulthorpe, director, IHS Automotive light-vehicle production forecast. "The estimated loss across the three lines would be 2,200 units per day," said Fulthorpe.
The massive explosions last week in a toxic chemicals warehouse have killed at least 114 people, while injuring more than 700, according to Chinese officials. While the exact cause of the explosions is not known currently, reports have indicated that use of water to extinguish initial flames could have caused the blasts. Police have confirmed the warehouse stored dangerous chemicals including calcium carbide, which leads to highly explosive acetylene gas when mixed with water.
Despite having a production plant in Tianjin, Toyota is among the least impacted automakers from the incident. The automaker has reported some damage to its research-and-development facility in Tianjin, while two dealer shops have also sustained damage. In comparison, Hyundai, Renault, and Volkswagen (VW) have witnessed greater damage of thousands of vehicles parked at stockyards. As noted above, some automakers have started alternative route scheduling for vehicle shipments.
As IHS Automotive noted earlier, Tianjin is one of the biggest automobile shipping ports in China and is widely used to ship vehicles within the country, especially northern parts (see China: 14 August 2015: Hyundai, Renault, VW among car manufacturers most affected by Tianjin blasts, Japanese automakers least affected). The port is also used for exports and imports and accounts for about 40% of China's imported cars, the largest share of any port in the country. As such, the explosions are likely to affect vehicle imports in China. "The blast might impact 30,000-60,000 imports of 1 million total car imports for this year," said Lin Huaibin, manager, IHS Automotive China light-vehicle sales forecast, adding that it is likely to take a couple of months before Tianjin port is back to normal operations.