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• Japanese carmaker warns of cuts until end of year
• Hopes rise for Tokyo parts factory closed by disaster
Workers at Toyota's UK factories face more short-time working in coming months after the world's biggest carmaker warned that production may not return to normal until the end of the year.
Several Japanese carmakers have announced production cuts in Britain after the earthquake and tsunami in March devastated the country's northeast and disrupted supply of car parts. Japan's government proposed a special ¥4tn (£29.6bn) budget to help fund reconstruction efforts on Friday and plans to build 100,000 temporary homes. About ¥1.2tn will go to fixing roads and ports and ¥700bn spent on building homes and clearing rubble. "This is the first step toward rebuilding Japan after the major disasters," said finance minister Yoshihiko Noda.
Toyota said that output would start to pick up in July in Japan and around August overseas, with a complete recovery expected in November or December. Until then, Toyota's Japanese factories will continue to work at volumes equivalent to half of original plans, and at an average 40% outside Japan.
"With this many aftershocks, including one last night, we've seen some of the recovery work thrown back to square one many, many times," said president Akio Toyoda. "In that sense, it's difficult to say what the impact on production volumes or earnings will be."
The Japanese carmaker has already put one of its UK factories on short-time working. Toyota announced this week that it would shut Burnaston factory in Derbyshire, which makes the Auris and Avensis models, for two days each week in May. Workers also agreed to limit production to half a shift on the other three days. This affects 2,600 workers, who will still be paid on Fridays through May and work back these hours at a later date.
Burnaston and Toyota's engine plant in Deeside, north Wales, are shut for the long Easter break to 3 May. Honda and Nissan have also cut production in the UK. A spokeswoman for Burnaston was unable to say how the latest announcement from Japan would affect the factory.
Toyota has extended production cuts at its North American factories into early June, while those in China are operating at 50% capacity, and production at three Thailand plants is being cut by 70%.
The latest news from Toyota came hours after Japan's Renesas Electronics, a major supplier of chips to the car industry, said it would resume operations at a damaged factory north of Tokyo in mid-June – a few weeks ahead of schedule – which will ease a bottleneck for carmakers.
The news pushed Japanese auto stocks sharply higher to reverse earlier losses. Shares in Toyota ended the day 3.1% higher, while Nissan Motor Co gained 3.6% and Honda added 2.3%.
Some believe that Toyota's forecast could prove conservative. "According to what we're hearing directly from companies, it looks like the recovery on the ground is faster than people think, and Toyota may well restart production even faster than they stated in this announcement," said Tetsuro Ii, chief executive of Commons Asset Management.
Japanese carmakers have slashed production owing to a shortage of electronic and resin-based parts. By the end of this month, Toyota will have produced 500,000 fewer vehicles globally than it had initially planned. Overseas carmakers, including General Motors and Ford, are also affected by the shortages.