TOKYO -- Toyota's global output sank for the fourth straight month as a shortage of semiconductors and supply chain disruptions caused by COVID lockdowns in China hurt production.
Output fell 8.6 percent in July from a year earlier to 706,547 vehicles, Toyota said in a statement Tuesday. The production volume was below its target of around 800,000 units and the year-earlier output of 773,135.
Sales declined 7.2 percent to 797,179 units, extending a slump for an 11th consecutive month.
A shortage of computer chips that go into many car parts, higher raw material costs and frequent shutdowns at factories in China because of COVID-related curbs have thrown global auto assembly lines in turmoil.
Toyota said domestic production fell 28 percent in July, outweighing record overseas production, up 4.5 percent that was driven by a strong recovery in Europe, China and the rest of Asia.
The global auto industry has weathered supply chain disruptions caused by chip shortages and China's strict COVID restrictions, but Toyota has also been dealing with heavy rain in Japan, a production line halt due to a recall investigation, and coronavirus outbreaks at a local plant.
Toyota is sticking to its production target of 9.7 million vehicles for the fiscal year through March 2023 and has also kept its profit outlook.
The automaker plans to raise output through November, depending on supplies of parts and personnel. It expects September production to rebound to around 850,000 vehicles, a record for the month.
"In August this year, Toyota is planning to produce about 700,000 vehicles, and considering it made about 530,000 in August last year, I think the situation is starting to improve," said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute.
Still, Sugiura said Toyota was not out of the woods yet, citing uncertainty over stable chips procurement.
"In terms of recovery from the situation in the first half of the year, I believe that in the second half of the year, the company will probably set the monthly production level at 800,000 or 850,000 units a month. If production exceeds 800,000 units in a single month, that will be a record," he said.
Even though the yen has weakened against the U.S. dollar this year, meaning Toyota's products are more competitive overseas and its income gets a boost in the local currency, executives this month said they are not confident enough to raise profit guidance.
They cited "many uncertainties ahead," such as downward pressure on the economy and potential interest rate hikes in other nations.
Separately, Nissan said July production climbed 9.4 percent to 284,755 vehicles, while sales dropped 13 percent to 265,905 units, extending declines for a 13th straight month. Honda said output rose 5.9 percent in the month to 343,205 vehicles, the second consecutive increase.
Reuters contributed to this report