Toyota to trim Apr-May auto output by 13-14% on parts shortage

Toyota Motor, Japan's largest automaker, has informed its components suppliers that the company will trim again its vehicle output for April and May by 13-14% across all domestic plants, due to the delay in component deliveries. Japan's flat steel consumption by the domestic auto sector won't become active soon, according to market sources.

The company had also lowered its March output over the continuing global shortage of semi-conductors, the delay in other components supplies amid COVID-19, and the suspension of supplies from some components makers who had been affected by the large earthquake that hit northern Japan on March 16, sources shared.

Toyota had initially planned to ramp up output since last October to cover losses over August-September caused by the delay in certain components supplies from Southeast Asian countries. But Toyota's auto production didn't improve as fast as it had expected, so the company has been making downward adjustments on its production plans, as reported.

"And the earthquake had forced Toyota to lower its output by about 30,000 units this month, and the impact is expected to continue in April. We really wonder when Japanese automakers can start lifting their output," a flat steel trader in Tokyo lamented.

With the latest adjustment, Toyota plans to produce about 250,000 units in April with 21 days of operations, lower from 290,000 units or by about 14% in its initial plan a month ago, and it plans to produce 210,000 units in 17 days in May, decreased by 13% or by 30,000 units, and its newly released output plan for June will be around 310,000 units in 22 days.

Accordingly, Toyota's average daily output will be around 11,900 units/day in April, 12,400 units/day in May, but higher at 14,100 units/day in June.

"If Toyota's daily output reaches 14,000 units, the company will be operating at high levels and will consume more steel. But we wondered whether Toyota would have to make another downward adjustment should its production recovers to normal by June. So steel producers must be very careful about making their steel production plans for auto-related customers," a sales official from an auto component maker in Nagoya, central Japan said.

Steel consumed in passenger cars is about 700kg/unit on average, of which about 30% is special steel, Mysteel Global notes.

The sales official added that the impact from the ongoing Russia-Ukraine conflict to Japan's auto sector has yet to be seen, but the country's actual vehicle exports to Russia will decline. "Japanese automakers must include that to their export plans, but we believe that they can allocate more exports to other countries, so Japan's overall auto output for exports may not decline," he predicted.

The Japanese government will ban exports of luxury products to Russia, including cars worth more than Yen 6 million ($48,780) effective from April 5.

Written by Yoko Manabe, yoko.manabe@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.