Japanese automotive component suppliers that serve Toyota and other manufacturers are signalling rising cost and supply risks stemming from the Iran war, saying increases in oil-related commodity prices could erode profits and complicate production planning.
Although vehicle assembly has so far continued without interruption, executives at multiple firms warned they cannot fully quantify the consequences of possible supply disruptions. Those disruptions could force suppliers to absorb near-term cost increases before they are able to recover them from automakers.
"At this point we are keeping operations running so our customers are not affected," Aisin CEO Moritaka Yoshida said at the Nagoya Stock Exchange. "But how long we can sustain that is uncertain."
Asia was highlighted by executives as the region most exposed to interruptions in flows of crude oil, gas, fuel and related products from the Gulf, and some businesses are already finding operations increasingly difficult without dependable imports.
Aisin told investors that rising aluminium costs - a material it uses for die-cast parts including transmission cases - are weighing on its operating profit outlook. The company estimated the hit to be roughly 15 billion yen in the financial year ending March 2027.
Denso, Toyota's largest parts supplier, reduced its operating profit projection for the current fiscal year and said it could face about a 45 billion yen impact tied to what it described as "uncertainty risks." Denso's CFO Yasushi Matsui pointed to potential cost inflation and the danger of supply interruptions for plastics, solvents such as thinners, and other materials connected to the Gulf situation.
Executives at other Toyota Group suppliers warned that the conflict, which began on February 28, has the potential to interrupt material flows and manufacturing processes even if vehicle assembly lines remain intact in the near term.
Toyota Industries President Koichi Ito said some suppliers are seeking price increases simply to secure materials, or are shortening price guarantee windows from months to weeks. He added that naphtha-derived product price hikes and related oil-dependent cost rises are spreading across a broader array of items than previously expected, making quick cost pass-throughs to downstream buyers difficult when the duration of disruption is unknown.
One of the most acute vulnerabilities identified by executives is the supply of painting thinner. "If automakers can't paint, then naturally they can't build cars, so the impact would be felt across the board," Toyoda Gosei CEO Katsumi Saito said.
For suppliers, the combination of rising commodity prices and compressed ability to transfer those costs downstream creates an earnings risk that could reverberate through manufacturing supply chains. Companies already disclosing estimated impacts have quantified material earnings pressure in the tens of billions of yen, underscoring the near-term financial exposure within the Toyota supplier network.
($1 = 159.4700 yen)