Toyota Considers New Production Strategy As World Burns

Toyota Motor Corp. is reconsidering its existing production strategy, citing ongoing global issues that are hindering its ability to manufacture vehicles at a normal pace.

Like most other automakers, Toyota has endured COVID restrictions, supply chains bottlenecks, component shortages, at least one cyberattack, and some new obstacles stemming from Russia’s invasion of Ukraine. These issues have already encouraged General Motors to pursue lower output as it focuses on selling on higher-margin vehicles. Though it’s hardly the only automaker signaling diminished production for 2022. Even the National Automobile Dealers Association is assuming 2022 will be another year of extra-tight inventories and wild markups. It’s something the industry was already doing, with Toyota becoming the next company opting to rejigger its targets to account for hard times.

“We need to examine the conditions before us,” Chief Executive Officer Akio Toyoda explained on Wednesday. “If we do not continue to make sound production plans [as well as our suppliers] this will lead to exhaustion.”

Considering Toyota has already cut its output goal for the fiscal year from 9 million vehicles to 8.5 million, issuing another cut within a few weeks looks pretty bad. But that’s allegedly not what’s happening. According to Chief Human Resources Officer Masanori Kuwata, the company is only seeking to temper its targets for the spring quarter (April-to-June) and would have another update for what that means in the coming days.

I’m skeptical. After forcing staff to work on reduced schedules for the last two years, a lot of automakers have started talking about running leaner. Some have attributed this to their electrification strategy requiring fewer persons on the assembly line. But the general consensus seems to be that layoffs are coming, regardless of whether it being attributed to a crippled economy or some fantastical-sounding business model. My guess is that Toyota’s upcoming meetings will be covering similar territory with Akio coming forward to announce job cuts.

“As the union points out, a production plan that exceeds the capacity of personnel and equipment is abnormal,” Toyoda said earlier in his speech, adding that the automaker was “already at the limit.”

Toyota has already announced that it will be tweaking its management structure for 2022. However, it was fairly optimistic about upping its production targets. Compared to the industry as a whole, Toyota actually weathered the last couple of years rather well and said it was hoping to increase volume going into the spring of 2022. But it’s looking like that strategy is coming off the table.

“We learned firsthand, during times like major recalls, the importance of prioritizing safety and quality above all else and not neglecting the people supporting us on the ground,” Toyoda said. “Together with suppliers and dealers, we want to work together to overcome the current crisis situation.”

[Image: Toyota]