Toyota Falls After Kan Asks Chubu Electric To Shut Nuclear Power Plant

Toyota Motor Corp. (7203) fell in Tokyo trading after Prime Minister Naoto Kan asked Chubu Electric Power Co. to shut a nuclear power plant that provides electricity for several of the carmaker’s factories.

Shares in the world’s largest auto company dropped as much as 30 yen, or 0.9 percent, to 3,180 yen and traded at 3,195 yen as of 10:51 a.m. The Nikkei 225 (NKY) Stock Average fell 0.2 percent.

Kan asked Japan's third-biggest utility last week to shut its Hamaoka plant, citing a government study that showed an 87 percent likelihood of a magnitude-8 earthquake striking the area within 30 years. The request was the government’s first since Japan’s record temblor and tsunami in March caused the world’s worst nuclear accident in 25 years.

Chubu Electric serves central Japan, including Aichi prefecture where Toyota operates 12 car and component factories. Suppliers to Toyota, including Denso Corp. (6902) and Aisin Seiki Co. are also based in the prefecture, and fell 1.6 percent and 1.5 percent respectively.

“The impact on the auto industry will not be minor and Toyota and affiliated suppliers will likely bear a large proportion of the burden,” said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo.

Chubu Electric’s board met on May 7 to discuss the government request. No decision has yet been made, said Tokyo- based spokesman Akio Miyazaki.

Toyota has said production in Japan may normalize by November or December. Chubu Electric’s shutdown could force Toyota to move that target to the quarter ending in March, Endo said.

Toyota spokeswoman Shiori Hashimoto declined to comment on the possible shutdown.

Osaka-based Daihatsu Motor Co., Japan’s largest minicar maker, also fell, declining 2.1 percent to 1,287 yen.

Source: Bloomberg