#ToyotaMotorCo

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.

Following last week’s announcement where Toyota explained its need to scale back Japanese production by 20 percent this April, the automaker has outlined planned slowdowns for the foreseeable future. It’s citing all the usual problems. Countries are still employing various COVID-19 restrictions that are upending supply chains, semiconductor production for automobiles remains insufficient, and there’s a war in Eastern Europe that’s creating all-new troubles while exacerbating some of the more familiar ones. But scaling back output might not be the death sentence it sounds like.

With last year resulting in 10 million deliveries worldwide, Toyota actually managed to improve its sales against 2020’s year-over-year global production decline of 12 percent. And the last two years have also yielded enhanced profitability for the automaker, despite it having expressed repeated concerns about procuring enough components to keep popular models (like the RAV4) in stock. In 2021, Toyota saw $249.4 billion in revenue and even became the best-selling automaker in the United States, dethroning former top-dawg General Motors.

Earlier this week, we covered Toyota stressing over the feasibility of its current production plans. Automakers around the world are presently trying to suss out how to maintain solid profitability with diminished output, with Japan’s largest manufacturer suggesting the present state of the world might force it to do likewise.

While we assumed the resulting decisions would take a couple of weeks for Toyota to finalize, as it considered its many options, the company announced on Friday that it would need to cut domestic production by 20 percent for the month of April. The automaker framed this as part of its preexisting “recovery plan” necessary to account for supply chain issues that never seem to end, saying that diminished output would gradually normalize in Japan over the spring.

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.