TOKYO -- Toyota Motor Corp. will take the foot off the gas in its race to recoup lost production, slowing the pace of recovery from April to June to achieve a more “reasonable” pace of output as the ongoing semiconductor shortage and COVID-19 pandemic continue to crimp the industry.
Toyota said it would slash its global production plan for April by 150,000 units to 750,000 vehicles, compared with the original schedule reported to suppliers earlier this year.
From April through June, the company’s fiscal first quarter, Toyota said its global production would average about 800,000 vehicles a month. The new goals are down from the 900,000-plus levels Toyota had targeted in recent months as it tried to catch up on lost production.
“We have revised production plans to be more reasonable in line with recent realities,” Toyota said in a news release on Thursday, adding that April to June would constitute an “intentional pause.”
“By doing this, we will establish healthy workplace environments that place the highest priority on safety and quality, rather than exceeding the capacities of facilities, pushing people to their limits, and making do through overtime work,” Toyota, the world’s largest automaker, said.
In rolling out an “intentional pause,” Toyota is reviving the term President Akio Toyoda coined after his company’s 2010 global recall crisis, when Toyota slowed the rampant pace of growth to focus on sustainable operations. In recent years, Toyota has again been running in the red zone.
Even as it was buffeted by the pandemic and microchip bottleneck, Toyota still kept its retail sales forecast at 10.29 million vehicles for the current fiscal year ending March 31, including Daihatsu and Hino. That total would be up from 9.92 million units the previous fiscal year and just below the record 10.6 vehicles sold in the fiscal year ended March 2019.
Kerrigan Advisors’ proprietary annual OEM Survey of over 100 executives reveals that the majority of respondents are worried about the financial impact of Chinese automakers’ growing global market share, and most expect that the EV transition to be slower than expected. The survey also queried executives on their outlooks for dealership valuations and profitability, as well as their expectations for the future of dealer networks and facility requirements.
Now, it plans to dial down global output about 10 percent from its original plan in May and down about 5 percent from its plan in June, global procurement manager Kazunari Kumakura said
Next month, Toyota now plans to make 250,000 units in Japan and 500,000 units overseas.
In April, Toyota plans suspension on seven lines at five plants, out of 28 lines in 14 plants.
The slowdown will affect output of such models as the Toyota Camry, C-HR and Yaris, as well as Lexus nameplates including the NX, CT, UT, LS, ES, IS and RC.
Toyota said that previous attempts at on-the-fly adjustments to production were unsustainable.
“Up until now, we have conducted recovery production with tremendous efforts from the various relevant parties,” Toyota said. “However, due to the parts shortage, we have had to make repeated last-minute adjustments to production plans, and this has imposed considerable burdens on production sites including those of suppliers.”
Going forward, Toyota will review production plans and risk factors on a monthly and three-month basis and share these plans with suppliers up to three months in advance.
Toyota’s latest production plan does not account for the war in Ukraine or possibly supply chain disruptions from a March 16 earthquake that rattled northeastern Japan.
But citing the uncertain environment, Toyota also held open the door to future downgrades.
“In addition to the shortage of semiconductors, the spread of COVID-19 and other factors are making it difficult to look several months ahead,” Toyota warned, “and there is a possibility that the production plan may be lower.”
