DNZOY.US, the largest supplier to TM.US, said it had included Toyota's production cuts in its expectations and saidToyota has the ability to resume production plans quickly.Denso is also expected to exceed its profit forecast for the current fiscal year.

Yasushi Matsui, chief financial officer of Denso, said that affected by Toyota Motor Corp's reduced production, Denso's profit in September could be reduced by about 20 billion yen to 30 billion yen. But he said Denso had already expected a potential loss of 75 billion yen for the next fiscal year ending in March, which had exceeded the loss. However, he also said that the company will flexibly adjust and revise its subsequent fiscal year targets according to the actual results of the next fiscal quarter.

"some automakers are unable to increase production after setbacks," Matsui said in an interview with the media at Toyota headquarters in Tokyo on Friday.But if Toyota says it will resume production, it will.”

Denso last month released a relatively conservative profit outlook of 440 billion yen for the current fiscal year. "it is very likely that our actual performance will exceed this figure." Matsui said.

Toyota Motor Corp said on Thursday that the supply chain disruption caused by the massive outbreak of novel coronavirus in Southeast Asia, as well as the current chip shortage.It will reduce production by about 40% next month and is expected to reduce production by about 360000 vehicles.

Earlier this month, Toyota kept its operating profit forecast for the current fiscal year unchanged at 2.5 trillion yen, mainly due to the uncertainty caused by the COVID-19 epidemic, chip shortages, rising parts prices and other factors. The average analyst forecast was 2.95 trillion yen.

It is understood that about 27 production lines in Toyota's 14 factories in Japan will be affected, from the RAV4 to the Corolla, Prius, Camry and Lexus RX models will be affected.

"especially in Southeast Asia, novel coronavirus's spread and the government's blockade policy are affecting our local suppliers." Kazunari Kumakura, CEO of Toyota Purchasing Group, said earlier.

It is understood that Southeast Asian governments are also making efforts to restore exports. For example, Thailand launched a new measure this week to conduct regular nucleic acid testing, vaccination and necessary quarantine measures for factory workers to minimize novel coronavirus's negative impact on its export-driven manufacturing industry.

Capital markets have responded to Toyota's plans to cut production to some extent, with Toyota Motor Corp shares down 4.09 per cent in the US stock market yesterday, the biggest drop since March 2020, and more than 4 per cent in Japan today.

Denso's share price is also not optimistic, with its shares down 3.47 per cent as of yesterday's close. The Japanese stock market tumbled nearly 9% today, also the biggest drop since March last year.

However, some analysts saidThe carmaker, known around the world for its excellent supply chain management, is fully capable of weathering the storm.

"although chip shortages and supply chain disruptions remain severe, Toyota seems likely to return all production activities to normal in October," said Koji Endo, an analyst at SBI Securities.

"with the share price falling, now is a good time to buy the stock. Generally speaking,In the long run, production cuts caused by the supply side rather than the demand side will not affect the long-term trend of stock prices.Even if it affects the stock price in the short term, it will rebound quickly. " Endo emphasized.

It is reported that in addition to Toyota Motor Corp, F.US and General Motors Co, the two giants of the US auto industry, also revealed this week that they planned to impose longer downtime at several North American plants because of the uncertainty caused by the outbreak and supply chain.

Mary Barra, chief executive of General Motors Co, said earlier this month that she expected the company to continue to deal with chip shortages for the rest of 2021 and next year. General Motors Co had previously predicted in the financial report that car production in North America would be reduced by about 100000 in the second half of the year.

Credit markets reacted relatively modestly, with the spread on Toyota's $1 billion bond maturing in 2026 widened to 41 basis points on Friday, the highest since early May. The cost of insuring Toyota's yen bonds rose 1 basis point on Thursday, according to CMA.

Denso is the world's second largest supplier of auto parts and systems by sales. Despite persistent risks, such as novel coronavirus's increased spread in Southeast Asia, Matsui believes Denso has a strong inventory management system. Matsui said that looking forward to October to NovemberDenso does not plan to close any of its factories because of a shortage of parts or other reasons.