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Toyota Cutting Production in North America by 30% Through October

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As vehicle production resumes at many auto plants this month, a picture is gradually emerging  of the pace automakers are planning to take as they ramp up operations in the coming weeks and months.

At Toyota, an anonymous source close to the decision-making process told Reuters that the company plans to reduce its North American production by 29% through October due to the coronavirus crisis. As part of the ramping up process, it’s expected it will take some time before Toyota catches up to last year’s pace. The recovery curve will be gradual, meaning the 30% announced drop is an average, not representative of the reduction every single month.

Overall, Toyota plans to build some 800,000 vehicles at its North American plants between now and the end of October.

This represents a 29% drop in comparison with what Toyota produced over the same period in 2019, and it’s 32% less than its January forecast for the same seven months.

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2020 Toyota Prius Prime
Photo: D.Boshouwers
2020 Toyota Prius Prime

This decline is not unique to Toyota, of course; other automakers are likely to follow the same pace. In addition to weak demand, supply problems and the social distancing measures now required in plants should also affect production in all companies’ facilities.

A slow and gradual recovery is thus to be expected just about everywhere, but it’s very difficult to predict whether other jolts will jumble plans. What happens, for instance, if new containment measures are required in the fall? At the same time, it’s possible demand will grow rapidly; for safety reasons, many consumers might prefer to buy a car rather than go back to taking public transit. On the other hand, the increasing popularity of teleworking could have the opposite effect on demand.

What it adds up to, of course, is a whole lot of very cloudy crystal balls in the industry.

The anonymous source’s dishing is most interesting when it comes to the rate of growth of production planned by Toyota. In the month of May, production is expected to sit at only 10% of last year's levels, and a normal rate of production won’t be attained until July. After that, it’s expected that the machine will rev up and actually outrun last year’s production pace.

In a nutshell, slow output to begin with, but back to par by July and full speed ahead by the fall.

That said, much if not all will depend on two things: consumer demand and the behaviour of the coronavirus in the coming weeks and months.

Stay tuned.