Toyota's Production Slows Down, Meaning Higher Prices For Cars
Toyota cuts production projections for July by 50,000 units due to parts shortages as a result of COVID-19 lockdowns.
Written by Allison Stone
Reviewed by Kathleen Flear
It’s a tough market to be shopping around for a new car, and it’s about to get even tougher if you’ve had your eyes on a
Toyota
. In what has been a
recurring theme
for the brand this year, Toyota has cut production targets once again due to setbacks related to COVID-19 shutdowns. This time, however, car prices are rising while stock prices are plummeting. Read on to find out more about which cars will be impacted by price hikes, Toyota’s production plans for the future with
car ownership super app
Jerry. Toyota continues to suffer supply chain woes
According to
Barron’s
, parts shortages
from COVID-19 lockdowns are to blame for Toyota’s ongoing production setbacks. In a press release from Toyota, the brand first issued an apology to customers. “We at Toyota would like to again apologize for the repeated adjustments to our production plans due to the parts shortage resulting from the spread of COVID-19, and for causing considerable inconvenience to our customers who have been waiting for the delivery of vehicles, suppliers, and other parties concerned,” said the
Toyota press release
titled “July production plan”.The forecasted output for July was 850,000 units, but Toyota revised its global production plans by 50,000 units due to the impact of an outbreak at one of the brand’s suppliers.
Will Toyota bounce back?
In the statement released by Toyota, the brand said global production volume for July through September is still estimated to average about 850,000 units per month, but that “it remains difficult to look ahead due to the shortage of semiconductors and the spread of COVID-19,” and that there is a possibility the plan “may be lower.”
At this point in the pandemic, supply chain issues and setbacks like this aren’t surprising, but they still have an impact on investors and car buyers alike.
Barron’s reported that the price for a new car in the U.S. is up about 15% since the start of 2021 according to Federal Reserve data, and further supply chain disruptions mean that trend will continue.
Less inventory means higher prices at dealerships, and oftentimes stock losses as well.
Toyota stock has lost about 14% of its valuation this year, but the Japanese automaker is still faring better than competitors General Motors and Ford where shares are down about 44% and 45%, respectively.
Toyota’s production projections further into the future hope to make up for lost time, with a plan to manufacture 9.7 million vehicles for the 2023 fiscal year.
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If you’ve had your eyes on a new Toyota model, paying a slight markup at the dealership could be inevitable.
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