Toyota's CEO says production won't return to normal levels until the end of the year

Toyota Motor has had to contend with a myriad of disruptions to its supply chain following the 9.0-magnitude earthquake and subsequent tsunami that struck Japan on March 11, hobbling the country's infrastructure. This week, the world's biggest automaker said it will not return to its pre-disaster production levels until the end of this year.

Though Toyota was long viewed as a model among businesses for its consistent growth and quality control, the company came under fire in 2010 following reports of electrical malfunctions in its vehicles. The company recalled 2.2 million cars and was fined heavily, but a government panel concluded that Toyota's electronic throttle systems were not at fault for unintended acceleration as consumer advocates had charged.

Now, the Japan-based carmaker is working to shore up its supply chain as it moves to resume production at its Japanese plants. The majority of automobile manufacturing facilities in the island nation is located in the northeast part of the country - the hardest hit by the natural disasters - and as a result, the auto industry has taken a disproportionate hit to its supply chain compared to other sectors.

The announcement by Toyota on Friday that it wouldn't resume its full manufacturing capacity until at least the end of the year is the longest time frame yet described by the company, the New York Times reports. Toyota has 17 factories in Japan, and though a majority were unharmed, its U.S. factory lines are working at half volume. Moreover, its overseas manufacturing facilities are operating at 40 percent capacity as the company's suppliers struggle to resume operations.

The world's biggest carmaker said last week that it would slash its U.S. manufacturing capacity by 75 percent over the next six weeks; it also announced its Japanese operations would function at half-capacity through at least June 3 - though the company had refused to comment about possible future disruptions to its supply chain beyond that time frame.

On Friday, Toyota chief executive Akio Toyoda said the company plans to slowly ratchet up production through the summer months. According to Toyoda, the company will boost capacity at its Japanese facilities in July, and will have its international manufacturing plants increase production in August as parts become more readily available from Japan.

"The damage has been so widespread in this unprecedented calamity that its economic effect is being felt throughout Japan and in every industry," Toyoda told reporters.

Analysts contend the company's supply chain model has left it especially susceptible in the wake of the natural disasters. Toyota produces over half of its cars in Japan and then ships them overseas. Moreover, the company has a so-called "just-in-time" production system that keeps parts inventories at low levels and helps cut business costs. Though it was widely celebrated during the company's vaunted rise during the past decade, it is now a liability.

A reduction in its supply of vehicles couldn't come at a worse time for Toyota as global auto sales have surged as the global economy has recovered. With a shortage of vehicles, Toyota is potentially losing out on a wave of new business, especially among first-time buyers who have yet to build brand loyalty.

Toyota vice president of production Atsushi Niimi said the company currently faces a shortage of 150 critical parts - down precipitously from the 500 parts that were in short supply in the immediate wake of the disasters. "We need to procure more parts overseas, and we also urge our suppliers to make more forays outside Japan," Niimi affirmed.