Toyota Motor Corp trimmed its production outlook by about 3 percent to 9 million units from 9.3 million for the fiscal year ending March, blaming the spread of COVID-19 in Southeast Asia.
The world’s No. 1 automaker is adjusting production this month and reviewing plans for next month, while sticking to its forecast for operating profit of ￥2.5 trillion (US$22.7 billion) for this fiscal year.
Toyota last month warned of cuts due to the semiconductor and parts shortages as manufacturers were hit by COVID-19. Still, the move shows how even Toyota, having weathered the shortages well compared with peers, is vulnerable to the same constraints hurting the industry.
Photo: AFP
“Key reasons for the production adjustment include a decline in operations at several local suppliers due to the prolonged spread of COVID-19 in Southeast Asia and the impact of tighter semiconductor supplies,” Toyota said in a statement. “Although the outlook for November and beyond is unclear, current demand remains very strong.”
Japanese automakers have over the past decade invested heavily in Southeast Asia, a source of cheap labor and a supplement to their China operations amid trade tensions between that country and the US. Thailand is a major production hub for Toyota, Mitsubishi Motors Corp, Honda Motor Co and Nissan Motor Co.
Toyota said it is cutting this month’s output by 70,000 units and next month’s by 330,000. The company’s shares closed up 0.6 percent before the announcement.
The company is seeking to secure substitute parts to meet inventory-depleting global demand for vehicles. Automakers globally have lost revenue because shortages have slammed output. India’s largest automaker by deliveries, Maruti Suzuki India Ltd, said volume would likely drop to about 40 percent of normal last month. In Japan, Suzuki Motor Corp is cutting vehicle production by 20 percent this month, while in Europe, Renault SA plans to halt assembly plants in Spain for as long as 61 days before the end of the year.
“The spread of COVID-19 infections remains unpredictable, making it difficult to maintain operations due to lockdowns at various locations, and we are working to transfer production to other regions,” Toyota said.
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