Chinese Lockdowns Force Toyota to Cut Production Again

Matt Posky
by Matt Posky
chinese lockdowns force toyota to cut production again

The automotive industry has basically resigned itself to running with lessened production for the foreseeable future. A significant number of automakers have suggested that it might be more lucrative to scale back output, reduce overhead, and focus on achieving broader margins per car during this prolonged period of economic and logistical duress. However, Toyota started the year saying it would do its utmost to raise production output as a way to make up for losses incurred during the pandemic. The company even said it anticipated things to gradually normalize through the spring.

Unfortunately, things have not gone according to plan. By March, the Japanese automaker had lowered its output goal for the fiscal year by 500,000 global units. Another 20 percent was lopped off for the month of April and leadership began expressing concerns that those preexisting goals might be totally untenable. While there were moments with the target actually rose, Toyota has repeatedly been forced to walk those claims back as the realities of the market dashed its dreams. Now, the company is once again cutting planned output for the month of June over supply chain issues with China.

Toyota recently stated that it expected next month’s output to be about 100,000 units shy of its original target and has just added another 50,000 impossible-to-build vehicles to that list. The company said that would leave it with about 800,000 cars for the entire month. According to Reuters, Toyota blamed the incredibly strict COVID-19 lockdowns that are currently taking place in and around Shanghai.

From Reuters:

Japan’s largest automaker said it still expects to produce 9.7 million vehicles worldwide in the current financial year, though there is a “possibility” of a lower estimate.

The company said it would suspend operations at some of its domestic plants for the week of June 6.

The reduced estimate by Toyota – widely viewed as a bellwether for Japan Inc — is the latest evidence of how China’s pandemic lockdown has added to uncertainty for automakers and other manufacturers already grappling with a shortage of microchips.

Ongoing Chinese lockdowns are creating serious problems for the global supply chain and are accompanied by chip shortages and a slew of other factors that are making it exceptionally difficult to produce goods in a state of normalcy. Many automakers had hoped that things would have stabilized by the summer. But the current prognosis offered by industry analysts, the media, and industry leadership has problems persisting for all automakers into 2023.

[Image: Andrii Medvediuk/Shutterstock]

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3 of 29 comments
  • Dimwit Dimwit on May 29, 2022

    All the manufacturers are raising the transaction prices. I will wager this is so they can cut China out of the supply chain without hitting the bottom line too bad. Cheap is useless if it's unavailable. They have cut their own throats to save face on COVID. It looks good on them.

  • Jeff S Jeff S on May 31, 2022

    I wouldn't be that upset if there were less Chinese sourced parts but I don't think it will last and as for the Chinese they will eventually be selling their vehicles in the US. The Chinese will probably be marketing less expensive EVs in a few years.

    • RHD RHD on Aug 01, 2022

      It would be safe to expect dumping of EVs at under cost in order to establish a foothold in the market. Meanwhile, if Toyota would move more of their parts production back to Japan, their supply chain would be shorter, and the quality of the components would certainly not suffer.

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