Toyota’s aggressive plan to ramp up production

TOKYO — After repeated cuts in its plans last year, Toyota’s global 2023 production will be back with a vengeance.

In outlining its tentative output plans for suppliers, Toyota said worldwide vehicle production could soar to a record level of 10.6 million vehicles this year.

That’s a big jump from the company’s previous factory record of 9.05 million in 2019, before the COVID-19 pandemic and global semiconductor shortage began interrupting operations.

“The worst time is behind us,” declared Kazunari Kumakura, chief officer of the purchasing group.

Toyota has gradually bolstered production plans by wrangling alternative semiconductor sourcing, building direct ties to chip makers and communicating more closely with suppliers.

The company churned out 8.58 million vehicles globally in 2021.

Results for all of 2022 will be released Jan. 30. But through November, worldwide output for the Toyota and Lexus brands was up 7 percent, to 8.33 million vehicles.

Cranking up output past 10 million vehicles would mark a significant achievement for Toyota as it races to recoup lost production and restock diminished inventories. It had hoped to make up ground in 2022, but repeatedly faced setbacks due to the semiconductor crunch, pandemic lockdowns and even natural disasters.

In November, Toyota again cut its output plan to 9.2 million vehicles, from 9.7 million, for the fiscal year ending March 31.

But Toyota’s latest outlook also comes with a big caveat in the form of a downside potential of 10 percent — an acknowledgment of the lingering risk of continuing microchip and pandemic disruptions.

Toyota decided to offer guidance in a range rather than a single target figure. That means the company sees output ranging from around 9.5 million vehicles, under worsening supply constraints, to as high as 10.6 million under a best-case scenario.

“We find it difficult to predict what production volume will be like,” Kumakura said. “Looking ahead, there will still be chips that are hard to secure and other chips that can be secured stably.”

Toyota’s latest plan for February puts global production at 750,000 units.

Japan’s top automaker has been remarkably transparent in communicating its production plans and revisions over the past year. Its forecasts, in typical Toyota fashion, tend to be conservative. It planned 800,000 units for November, for example, but actually made 833,104.

The regular updates are meant to help parts makers plan for smoother supply delivery.

Like its competitors, Toyota is racing to churn out as many vehicles as possible while demand is high for its super slim inventories. Toyota Motor North America had only an 18-day supply of vehicles as of Jan. 1, down from 21 a month earlier, according to the Automotive News Data & Research Center.

That compared with a 29-day supply at Honda, 24 at Mazda and 60 at Ford.

Supply constraints have also stymied Toyota’s deliveries in Japan. The luxury Lexus brand has limited orders there because of semiconductor shortages, Japan’s Nikkei newspaper reported. It cited one dealer as saying that wait times for deliveries take at least six months.

Output on assorted Lexus lines in Japan was suspended in November and December, undercutting output of such models as the Lexus LS, IS, RC and ES passenger cars as well as the NX, UX and RX crossovers and GX SUV. Lexus vehicles are especially susceptible to semiconductor shortages because the premium models use so many of the chips.

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