Toyota extends halt in Tianjin operations on safety concerns

Automakers divert shipments from port after blasts

Automakers divert shipments from port after blasts

TOKYO (Reuters) — Toyota Motor Corp. said today its operations near the Chinese port of Tianjin will remain closed at least until Sunday, extending a suspension originally set through Wednesday, due to safety concerns after last week’s deadly chemical explosions in the area.

Toyota also said Sichuan FAS Toyota Motor Co Ltd., a joint venture, would close its Changchun plant in northeast China through Friday because the port disaster had delayed custom clearance of parts shipped from Japan. It will make up for lost output by scheduling substitute production days.

Toyota, which operates two assembly lines near the Tianjin port and another line in a different part of the city, said it had not yet been able to confirm that the sites were safe. The Chinese government has said there were about 700 tons of the deadly chemical sodium cyanide in the warehouse that blew up.

“Since we have been unable to confirm the safety of the area in the vicinity of the blast, we have decided to keep production offline,” the company said in an email.

Toyota will halt operations through Saturday and remains unsure when they will resume, a company spokeswoman said. The affected plants are usually closed on Sundays, she added.

Automakers are struggling to assess the long-term cost of last week’s massive explosions, which killed at least 114 people and indefinitely disrupted operations at China’s main car import terminal. Toyota said at least 67 employees have been injured.

Volkswagen AG, BMW AG and Subaru-maker Fuji Heavy Industries Ltd have moved to switch to Shanghai and other ports.

Toyota is also likely to divert shipments to the Shanghai and Dalian ports, a senior Beijing-based company executive said.

Logistics issues

Before the blasts, the Tianjin port handled about 40 percent of the country’s imported cars, according to research firm IHS Automotive.

A prolonged halt of operations in Tianjin can be potentially costly for the world’s second-biggest automaker, which produced 432,340 vehicles at the city’s three assembly lines last year, according to IHS. It estimated a production loss of 2,200 cars per day as a result of the explosions.

This could hurt Toyota’s sales in China, which have remained robust even as rivals struggle. The Chinese auto market has been shrinking on the country’s slowing economic growth and a recent stock market slump.

Shanghai’s role

Shanghai’s sole auto terminal could see a 10 percent rise in car volume based on queries received since the Tianjin blast, said a marketing official at Shanghai Haitong International Automotive Terminal Co. Ltd.

The port has an annual capacity of 2 million to 3 million cars, said the official, who declined to be identified. Last year, China imported 1.4 million cars, customs data showed.

“We’re only a temporary solution to the difficulties in Tianjin,” the official said. “We can’t be a substitute for Tianjin. After this, Tianjin will definitely continue to hold on to its dominant position.”

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