Toyota Announces Manufacturing Miss

Toyota Motor Corp. has announced it will not reach its goal of manufacturing 9 million cars in its fiscal year, which ends in March. The company cited persistent chip shortages as the reason.

The company has pared back production to 700,000 units in February, a figure that’s around 150,000 fewer units than the original goal for the month, Toyota said in a statement. The automaker, which captured recognition as the world’s No. 1 selling automaker last month, did not set a new annual target. The company simply reported that it expects the final output to be lower than previously forecast.

Toyota reduced production in September when COVID lockdowns in Southeast Asia disrupted its supply of key parts.

“We’re in a production recovery phase, but we haven’t been able to meet as high targets as we were previously planning,” said Kazunari Kumakura, head of Toyota’s purchasing group. He noted that it would be “very difficult” to meet earlier forecasts for annual production under current conditions.

Even with production reductions forecast for February, Toyota will make about 5% more vehicles than February 2020, when it produced 668,001 vehicles.

Kumakura notes the company plans high levels for March and the next fiscal year. 

“There are still risks and with Covid continuing to spread, conditions are difficult to read,” he added.

Supply chain hits continue, with signs showing a turn for the worst. Japan’s auto parts trade group warned of many factors impacting parts and materials shipments.

Toyota will suspend output at eight plants in Japan from two to 13 days in February. Other Japanese automakers are expected to the do same.

“We will continue to examine the situation and consult with all companies involved in considering the use of substitutes where possible in anticipation of a continuing shortage” of semiconductor-related parts, Toyota reported in a statement. “We will also continue to work with our suppliers in strengthening the supply chain and make every effort to deliver vehicles to our customers as soon as possible,” Kumakura said.

China’s zero tolerance approach to COVID also impacts the automaker’s production. Toyota recently halted work at its factory in Tianjin as the omicron variant spreads in the world’s biggest auto production hub. 

In a recent report, analysts at Fitch Solutions reported the COVID-Zero strategy “will have a global impact given the role China still plays in the global autos supply chain.”

Fitch predicted the recovery of global vehicle production will be delayed until 2023, due to ongoing semiconductor shortages, shipping delays and localized lockdowns.

Originally posted on Auto Dealer Today