# Toyota’s July global vehicle output drops again, puts annual target in doubt
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Toyota July production falls 8.6% amid chip shortage and
Meta Description: Learn why Toyota's production dropped due to COVID outbreaks, chip shortages, and recall probe, impacting its annual target.
URL: https://financedigest.com/toyotas-july-global-vehicle-output-drops-again-puts-annual-target-in-doubthtml

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(Reuters) -Toyota Motor Corp said on Tuesday its July global vehicle production had fallen 8.6% year-on-year, missing its target for the fourth straight month, as COVID outbreaks, severe weather and a recall probe on top of a persistent chip shortage hurt output.

The sustained weakness in overall performance in July from the world’s largest automaker by sales has raised concerns that Toyota may have to lower its annual production target of 9.7 million vehicles, even as China dials back pandemic restrictions and chip shortages are showing some signs of easing.

Toyota produced 706,547 vehicles worldwide last month, below its target of around 800,000 units and the year-earlier output of 773,135.

Production in the first four months of the current [fiscal year](https://www.financedigest.com/impact-com-fiscal-year-h1-2021-1-5b-valuation-150m-in-funding-bigcommerce-integration-69-customer-growth.html "impact.com Fiscal Year H1 2021: .5B Valuation, 0M in Funding,  BigCommerce Integration, 69% Customer Growth"), which began in April, has fallen 10.3% short of its initial plan.

The global [auto industry has weathered supply chain disruptions caused by chip](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors") shortages and China’s strict COVID restrictions, but Toyota has also been dealing with heavy rain in Japan, a production line halt due to a recall investigation, and coronavirus outbreaks at a local plant.

Toyota said domestic production had tumbled 28.2%, outweighing record July overseas production, up 4.5%, driven by a strong recovery in Europe, [China and the rest of Asia](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high").

In [August this year](https://www.financedigest.com/german-tax-revenues-fall-in-august-for-first-time-this-year.html "German tax revenues fall in August for first time this year"), Toyota is planning to produce about 700,000 vehicles, and considering it made about 530,000 in August last year, I think the situation is starting to improve,” said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute.

Eager to make a strong comeback, the company said earlier this month it would hold to its [annual production target as it planned to raise](https://www.financedigest.com/deutsche-post-raises-annual-dividend-warns-of-challenging-2023.html "Deutsche Post raises annual dividend; warns of challenging 2023") output through November, depending on supplies of parts and personnel. It [expects September production to rebound to around](https://www.financedigest.com/around-40-of-german-companies-expect-output-decline-in-2023-iw-institute.html "Around 40% of German companies expect output decline in 2023 – IW institute") 850,000 vehicles, a record for the month.

Still, Sugiura said Toyota was not out of the woods yet, citing [uncertainty over stable chips procurement as a risk and expressing scepticism the company could stick to the 9.7 million production](https://www.financedigest.com/vaccination-mandates-productivity-uncertainty-and-how-to-operationalise-eligibility.html "Vaccination Mandates, Productivity Uncertainty and How to operationalise eligibility") goal.

In terms of recovery from the situation in the first half of the year, I believe that in the [second half of the year](https://www.financedigest.com/ericssons-board-rebuked-by-shareholders-at-agm-for-second-year-in-a-row.html "Ericsson’s board rebuked by shareholders at AGM for second year in a row"), the company will probably set the monthly production level at 800,000 or 850,000 units a month. If [production exceeds 800,000 units](https://www.financedigest.com/carlsbergs-poland-unit-could-stop-production-lack-of-co2-threatens-food-industry.html "Carlsberg’s Poland unit could stop production; lack of CO2 threatens food industry") in a single month, that will be a record,” he said.

(Reporting by Satoshi Sugiyama; Editing by Shri Navaratnam and Bradley Perrett)


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