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According to media reports, Toyota's suppliers are confused by additional production cuts, while Toyota is reviewing procurement methods.
Toyota Motor Corporation's consolidated net sales and final profit for the April-December 2021 period reached record highs in the same period, thanks to the company's procurement capabilities, which have been strengthened in the wake of the Great East Japan Earthquake and other crises.
However, the prolonged shortage of semiconductors and the re-emergence of the new coronavirus infection have forced the company to reduce production, and the global production volume for the fiscal year ending March 2022 is expected to fall to 8.5 million units due to repeated downward revisions.
Suppliers are being pushed around by changes in production plans and are also suffering from soaring material prices.
Toyota is moving to review its procurement methods in order to reduce the burden on the entire supply chain.
Even though the entire automotive industry was hit by the Covid-19 Pandemic and the semiconductor shortage, Toyota cooperated with Denso and other major parts suppliers in the group. The company has been able to introduce new models such as the popular sport utility vehicle (SUV) thanks to its efforts such as providing detailed production plans and securing a large amount of inventory.
On the other hand, the global production forecast, which was originally set at 9.3 million units, was revised downward to 9.0 million units in November last year, due to the difficulty in procuring parts caused by the reemergence of the new coronavirus infection in Southeast Asia.
Thereafter, the shortage of semiconductors continued, and the situation was lowered to 8.5 million units due to the suspension of plant operations caused by the reemergence of the new coronavirus infection in Japan.
In response to the repeated changes in the production plan, Toyota is reported to have received bewildered comments from suppliers, such as "We have to keep hiring people to prepare for recovery production even if production is reduced," and "We have no choice but to repeatedly produce products and then dispose of them.”
With a sense of crisis that it might lose the trust of its suppliers, Toyota interviewed individual companies about the cost burden of excess inventory and personnel.
In consideration of the impact of soaring material prices on the supplier's business, Toyota will consider suspending its semi-annual request for parts price reduction for a certain period of time in the first half of 2022.
Reduced production will also lead to delays in vehicle delivery.
Toyota says it will "communicate more carefully than ever before" to secure the trust of its customers and dealers as well as its suppliers.
That’s all for now.
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