(Bloomberg) -- Toyota Motor Corp. cut its global car production target for November by around 15% from an earlier plan as a shortage of parts continues to weigh on the world's No. 1 automaker.
The Japanese company had initially planned to make 1 million cars next month but now expects to do only around 850,000 to 900,000 units, it said in a statement Friday.
“Since we are still experiencing a shortage of some parts and will be unable to make up for previous production shortfalls, we have adjusted our initial production plans for November,” Toyota said. “This adjustment will affect approximately 50,000 units in Japan, and between 50,000 units and 100,000 units overseas.”
Toyota's full-year production target of 9 million vehicles for the 12 months ending March 31, 2022 will be maintained however “due to the easing of restrictions on Covid-19 in Southeast Asia.” Smaller-than-expected production cuts in September and October also helped, it said.
“The worst period is over,” Kazunari Kumakura, the chief officer at Toyota's purchasing group, said at a media briefing. “We're seeing lower risks,” he said, although added as chip supply normalizes, supply and demand will remain tight.
Toyota, long lauded as one of the best in the business due to its just-in-time supply chain, has had a rough trot over the past few weeks. Last month, it said that power shortages in China were impacting output and it couldn't provide further visibility as the situation is “still in flux.”
Earlier in September, Toyota trimmed its production outlook for this year by about 3% because the spread of coronavirus in Southeast Asia was disrupting access to semiconductors and other key parts. And this week, supplier Nippon Steel Corp. sought an injunction against the automaker to prevent it from manufacturing and selling electric and hybrid vehicles that use a type of steel critical for the performance of motors.
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“In response to the continuing shortage of some parts, we will continue our efforts to strengthen our supply chain,” Toyota said on Friday. “We will implement thorough anti-Covid measures both at our own plants and at our suppliers, and since we expect the shortage of semiconductors to continue in the long term, we will consider the use of substitutes where possible.”
The November trim wasn't that much of a surprise considering the environment, Bloomberg Intelligence analyst Tatsuo Yoshida said.
Toyota “was aiming for a very ambitious recovery, but the output won't recover as much as originally planned,” he said. “Parts shortages and China's power shortages still remain as risks.”
Shares in Toyota closed up 0.4% on Friday. They've risen 25% this year.
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