Toyota revealed it will lose about 100,000 units of new vehicle production in October due to a shortage of semiconductor chips, although officials aren’t changing the company’s full-year output forecast.
Officials said early Thursday, the company expects to product 9.7 million vehicles for its current fiscal year, which will end March 31, 2023. However, Toyota is suspending production on 10 lines in seven plants in Japan. The company has 14 plants and 28 production lines overall in its home country.
The company’s initial three-month production forecast called for an average monthly production of approximately 900,000 units. However, due to the impact of semiconductor shortages, the planned global production volume for October is expected to be approximately 800,000 units: 250,000 units in Japan and 550,000 units overseas.
“The global production plan for October through December is planned to average approximately 850,000 units per month,” officials noted in a release. “This plan is based on careful confirmation of parts supply and the personnel structures and facility capacities of our suppliers.”
Nothing is certain other than they’re not alone
Despite this revision, the automaker said predicting its future production schedule will be tough, when factoring “semiconductor shortages, the spread of COVID-19, and other factors. We will continue to make every effort to deliver as many vehicles as possible to our customers at the earliest date while closely examining the situation.”
The timing of at least one set of cuts is poor. Toyota’s Motomachi plant will be down for a couple of days in early October. The facility produces the company’s hot-selling GR models, like the GR Supra and GR Corolla. The Corolla is the hot hatch du jour, which dealers inundated with wannabe buyers.
Toyota’s working through its issue, the company isn’t alone. Japanese rival Honda Motor Co. revealed Thursday it was would be slowing production at two plants in its home market by as much as 40% due chip issues as well as other logistical problems. Another plans to cut output by up to 30 percent, the company noted.
The output reduction will affect a variety of vehicles, including the Vezel sports utility vehicle, Stepwgn minivan and Civic compact car, Reuters reported.
Hits to the bottom line
When production slides, the bottom line takes a hit. Ford announced earlier this week, it was being hit by $1 billion more in costs than it expected earlier, much of that associated with parts availability and higher prices it paid to suppliers.
The company said the shortage resulted in a scores of “vehicles on wheels.” These are new vehicles that are completed with the exception of just some parts, forcing the automaker to keep them in storage until the needed components, including semiconductors, come in and can be fitted to the waiting vehicles.
The expected 40,000 to 45,000 vehicles ar, largely high-margin trucks and SUVs, which will be completed and sold to dealers during the fourth quarter. As a result, the company’s third-quarter adjusted EBIT is expected to be in the range of $1.4 billion and $1.7 billion.
Ford again affirmed its expectation for full-year 2022 adjusted earnings before interest and taxes of between $11.5 billion to $12.5 billion, despite limits on availability of certain parts as well as higher payments made to suppliers to account for the effects of inflation.
