Toyota cuts global production for 3rd time but says worst is over

TOKYO -- Toyota Motor Corp. will cut global production for a third time next month as the pandemic and global shortage of automotive microchips continue to bite, but the impact will not be as painful as before and Japan's biggest automaker finally sees signs of recovery on the horizon.

"I think we are over the worst period," global procurement manager Kazunari Kumakura said.

Toyota will produce between 850,000 and 900,000 vehicles worldwide in November, the company announced on Friday. The total represents a 15 per cent cutback from Toyota's revised November production plan to produce 1 million vehicles in the month.

But even with the cutback, the reduced output level still represents an all-time high for the month of November, Toyota noted. That is because in August, Toyota actually raised the November monthly target to 1 million units in an attempt to catch up from earlier setbacks.

Procurement manager Kumakura said the company could have reached 1 million units in November, had it not been for lingering supply chain woes.

November production last year, he noted, was 830,000 units.

Kumakura also predicted Toyota's output will recover from December, and he said Toyota will do all it can to make up the lost volume later in the fiscal year ending March 31, 2022.

"We are now coordinating both internally and externally with our suppliers to see how much we can make a recovery in December and beyond," Kumakura said. "We target a high production level for December and beyond, so we will try our best to make as many vehicles as possible."

In November, Toyota will lose about 50,000 units in Japan, and between 50,000 and 100,000 units overseas, compared to the upwardly revised forecast set in August.

While the cutback shows how supply chain snarls continue to impact Toyota, they also show an improving reality on the ground. Toyota said it would have to cut global production by 40 per cent in October, after being forced to reduce global output by 40 per cent in September.

And despite the pinched production, Toyota kept its fiscal year global production target unchanged at 9 million units. Last month, Toyota lowered its fiscal year target to 9 million units, from 9.3 million vehicles, for the fiscal year ending March 31, 2022.

That total covers output only from Toyota and Lexus, not Daihatsu or Hino.

Toyota said it was able to hold its production outlook stable because pandemic restrictions in Southeast Asia are easing and because the actual production cutback that Toyota has booked so far in September and October was smaller than previously expected.

Kumakura blamed the November slowdown on the microchip shortage and supply chain bottlenecks triggered by the COVID-19 pandemic in Southeast Asia. He said Malaysia in particular remains a trouble spot but added that conditions there are improving.

Meanwhile restrictions in Vietnam are also clearing up, he said.

"Factory operation rates are increasing in Southeast Asian countries, and we are now able to secure parts enough for normal production levels," Kumakura said.

In Japan alone, Toyota plans to suspend operations at six of 28 lines in November.

Those shutdowns affect four of Toyota's 14 factories in the home country, including assembly plants that manufacture such nameplates as the Toyota Camry, Corolla Sport, Yaris and C-HR, as well as Lexus entries including the Lexus ES sedan and NX, UX and RX crossovers.

Toyota had largely confounded the industry by ramping up output and notching record profits despite the double hit of a pandemic and microchip shortage. But over the summer, Toyota finally succumbed to the global slowdown and joined rivals in pulling back production.

Toyota declined to say how the dented production might its profit and revenue forecasts. The company announces earnings for the July-September quarter in early November.