Toyota to restart output in Tianjin

An assembly line at Tianjin FAW Toyota Motor Co. The affiliate built about 440,000 cars last year, almost half of Toyota's annual vehicle output in China. [Yue Yuewei / Xinhua]

Toyota Motor Corp is beginning trial production of cars at its China plants that were shut after explosions in Tianjin, the first step in reopening the facilities following a two-week closure, people familiar with the matter said.

Workers have returned to the plants and Toyota is preparing to resume output on a trial basis before making a decision this week on whether to resume full production, said the sources, who asked not to be named discussing private plans. A test run of about 100 cars will start on Wednesday, one of the sources said.

Production has been shut down at Tianjin FAW Toyota Motor Co, the Japanese carmaker's local affiliate, since the Aug 12 blasts at a chemical storage site in the northern Chinese port city. The explosions killed at least 135 people and injured 67 Toyota workers who live in the area. About 4,700 Toyota and Lexus vehicles were also damaged.

Toyota has not made a decision yet on when it will restart production, said Ryo Sakai, a company spokesman. The carmaker has said its local operations will restart once it is able to confirm the safety of its facilities and the surrounding areas.

The Tianjin disaster took a broader toll on the auto industry, damaging 2,700 Volkswagen AG vehicles, shutting a nearby Hyundai Motor Co logistics center and forcing Fuji Heavy Industries Ltd to divert car shipments to Shanghai. The warehouse that exploded stored about 1,300 metric tons of oxide compounds, the Xinhua News Agency reported, citing Tianjin Vice-Mayor He Shushan.

The value of Toyota's lost output may be more than 660 million yuan ($103 million) a week, according to a Bloomberg calculation. Tianjin FAW Toyota built about 26,300 vehicles a month through July, according to figures from researcher LMC Automotive. Assuming the cars are sold at base prices, the value of that monthly production is about 2.83 billion yuan.

The calculation is based on the starting prices and average monthly output for each of the models Tianjin FAW Toyota makes, ranging from the 69,800 yuan Vios sedan to the 264,800 yuan Crown.

The affiliate built about 440,000 Crown, Reiz, Corolla and Vios cars last year, almost half of Toyota's annual vehicle output in China.

Toyota cannot comment on the value of the lost output, said Nick Maxfield, a spokesman for the company.

"The end result will depend on whether or not adjustments are made to recover lost production," Maxfield said. "Similarly, lost sales will depend on the amount of inventory currently at dealerships."