Toyota to cut production by 10% due to supply chain chaos

In a recent statement, Toyota said that it is difficult to predict the situation over the next few months. Things don’t stop there, however, as the company will make an intentional output cut next May, cutting output as planned to “match the reality of the more recent status quo”.

Specifically, recently Toyota Motor has informed major suppliers that they intend to reduce global production to about 700,000 vehicles for next May, down more than 10% compared to the original plan.

The move comes amid supply chain uncertainty fueled by Russia’s attack on Ukraine and a resurgence of Covid-19 cases in regions like China. The total new global production will be just above the 670,000 Toyota vehicles produced in May last year.

This decrease is even lower than the global output reduction for the second quarter announced in March. In particular, the Japanese automaker is expected to ship an average of about 800,000 vehicles per month in the three months of the second quarter of 2022, through the end of June.

It can be seen that the move by Japan’s largest automaker is the latest to point to supply chain difficulties that are hindering the global auto industry as the COVID-19 pandemic drags on. The outlook has been further complicated by the crisis in Ukraine.

Toyota made last-minute changes to its agile production plan. They usually try to make such modifications as soon as possible to ease the burden on suppliers. At present, the automaker’s suppliers have been forced to deal with some changes in production plans due to chip shortages, and Toyota’s reduced production will ease their burden.

Toyota President Akio Toyoda has told union members that, without proper production planning, suppliers risk becoming “burnt out”.

A Toyota spokesperson also said: “We at Toyota have made numerous adjustments to our production plans due to widespread shortages of parts due to COVID-19, causing significant inconvenience to customers. our customers and stakeholders; Up to now, we have carried out production resumption with great effort from various stakeholders with the aim of providing customers with a wide range of vehicles. As soon as possible, however, due to a shortage of parts, we had to make many last-minute adjustments to the production schedule, and this created a significant burden. for production sites including suppliers”.

“Therefore, we will plan based on the personnel structure and facilities capacity of our suppliers. By doing this, we will establish a healthy working environment that puts the highest priority. safety and quality, instead of going beyond facilities, pushing people to their limits and working overtime, we’ll then announce and share these plans with operators our supplier”, a Toyota spokesman added.

Toyota recently admitted that due to semiconductor shortages, ongoing COVID-19 risks and many other factors, it is difficult to look ahead over the next few months. and said it is likely that the company’s production plan will be lower than originally planned. Further adjustments may be made subject to Toyota’s ability to procure parts.

Toyota is not the only automaker forced to adjust production plans. Several other automakers are also affected in a similar way due to the ongoing supply chain crisis. The global auto industry has been reeling under pressure for more than a year due to chip shortages. The recent Russian attack on Ukraine has made disruptions worse with the unavailability of some key components.

As a result of sanctions imposed in response to Russia’s military activity in Ukraine, Japanese automakers Toyota and Mazda have suspended deliveries to Russia. Toyota also froze the work of the plant in St.Petersburg due to lack of parts. Against this background, new cars in the Russian Federation increased in price by an average of 40% in March. At the same time, Toyota sales in Russia fell by more than 60%.

In early April 2022, Toyota Motor Corp announced it had cut its 2022 outlook for new car sales in the US auto industry, citing supply chain difficulties due to the pandemic and conflict. in Ukraine caused.

Bob Carter, executive vice president of sales at Toyota Motor North America, said the Japanese automaker’s new outlook for the market was 15.5 million vehicles, down from a previous forecast of 16, 5 million cars.

The global auto industry has been impacted by the COVID-19 pandemic, and the subsequent semiconductor chip shortages even before Russia’s attack on Ukraine has affected parts of the supply chain and contributed to increased prices of raw materials such as aluminum and nickel.

“The supply chain challenges we’re seeing … will be with us for a while,” said Bob Carter.