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Toyota Says it Will Cut its North American Production by 29% Through October

Toyota Says it Will Cut its North American Production by 29% Through October

Author: Eric Walz   

Toyota Motor Corp plans to slash production in North America by nearly a third through October due to the coronavirus pandemic and its effects on the auto industry. The automaker expects it will take some time for its factory output to return to normal, a person familiar with the matter told Reuters.

With the cuts in vehicle production, Toyota will build about 800,000 vehicles, including its popular RAV4 SUV crossover and Camry sedan, at plants in the U.S., Canada and Mexico from April through to the end of October, the person told Reuters, who declined to be identified because the information is not public. 

While 800,000 vehicles is still a sizable number, its represents a decrease of 29% from Toyota's output in the same seven month period in 2019 and 32% lower than its forecast in January for production during the period.

The source said Toyota plans to keep May production at less than 10% of last year's levels before ramping up to normal levels in July. 

Toyota's U.S. plants have been closed for the entire month of April, along with plants operated by U.S. automakers General Motors and Ford Motor Co.

Japan's Toyota has had a big presence in North America with 14 plants producing vehicles, 10 of which are in the U.S. The automaker has been building cars in North America for the past 33 years. U.S.-built vehicles account for 14% of Toyota's global production.

Toyota built 1,241,615 vehicles in the U.S. in 2018, including the Carmy sedan, one of the most popular cars in the U.S. Toyota sold 388,618 Camry sedans in the U.S. in 2016, making it the number one selling car that year. Toyota had an equally robust 2019.

Toyota was hoping to repeat the success of 2019, until the global pandemic stalled auto production worldwide.

In 2019, Toyota's RAV4 SUV RAV4 sales marked an all-time best ever year with sales of 448,071 units, representing a 4.9 percent increase for the year. Sales of the RAV4 hybrid were up 92.3 percent in 2019.

"2019 was a strong year for Toyota. We retained our number one spot in hybrid, passenger car, SUV, small truck and retail sales," said Jack Hollis in January, group vice president and general manager, Toyota division.

However, as the economic fallout of the coronavirus continues to grow, demand for new vehicles is expected to drop for all automakers. In addition to weaker demand, global automakers are dealing with parts shortages and the challenges in implementing social distancing measures at plants once vehicle production resumes.

Analysts are also expecting that consumers will curtail their spending for the rest of the year. In addition, with millions of people working from home the demand for new cars will likely decrease, as people are commuting less.

U.S. automakers are planning to resume production beginning May 18 after the state of Michigan begins to ease restrictions on manufacturing in the state.

In March 2019, Toyota announced it will invest $13 billion in its U.S. manufacturing over the next five years, with a focus on electric & hybrid vehicle technology.

Eric Walz
Eric Walz
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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