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Japan: Quake disaster hits Toyota and Japan's economy

Memo warns of "significant impact" into summer
Toyota workers mournEnlarge
Newly recruited employees of Japanese auto giant Toyota Motor bow their heads to offer prayers for the victims of tsunami and the massive earthquake at the company's entrance ceremony at Toyota's headquarters in Aichi prefecture on April 1, 2011. (Jiji Press)

Last month's quake and tsunami disaster in Japan has been painful on every level — from human to environmental, to economic.

Add Toyota to that widening ripple effect.

In an internal memo acquired by the Wall Street Journal, the Japanese automaker warned U.S. dealers that its supply of new cars in North America could be "significantly impacted" into the summer:

"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."

The memo also warned of other supply chain disruptions stemming from the Mar. 11 quake, and said Toyota plants in North America — already running at reduced capacity due to the disaster — will be taking an "extended Easter break" beginning April 21.

“It was inevitable that disruptions to suppliers in Japan would trickle down to North American operations,” Bill Visnic, an analyst with Santa Monica, California-based researcher Edmunds.com, told Bloomberg last week.

Carter, who runs the company's U.S. operations, also said in the memo that Toyota has an inventory of about 300,000 cars and trucks in the U.S. In March, the company sold about 156,000 vehicles in the U.S., the world's second largest market for automobiles.

"Today we have good levels of inventory, but inventory will be getting tighter," the memo reportedly said. "Toyota will be producing new vehicles at significantly reduced levels."

Manufacturing makes up almost 25 percent of Japan's $4.3 trillion, export-heavy economy.

Meanwhile, the economic challenges keep piling up for Japan.

As GlobalPost's Gavin Blair reports today from Tokyo, the nation's ongoing disasters are expected to have a significant impact on Japan's economy, the world's third-largest after the U.S. and China:

“The initial impact of the disaster is expected to be a 5 percent drop in GDP for the April to June quarter,” Takashi Shiono, an economist with Credit Suisse in Tokyo told Blair. “But it should recover somewhat, by around 0.8 percent in the next quarter.”

http://www.globalpost.com/dispatches/globalpost-blogs/macro/japan-quake-toyota-economy