Automobile

Toyota: Old inventory ways gone

Like every automaker, Toyota has been struggling to meet high new-vehicle demand as the industry’s supply chain woes compound. The automaker had 17 days’ worth of inventory on hand as of March 1, according to the Automotive News Research & Data Center.

While low inventory levels have stifled U.S. new-vehicle sales in recent months, it hasn’t been all bad for automakers and dealers. Low incentives and reduced inventory costs have translated into higher profits, raising the possibility that companies might choose to keep fewer cars and light trucks on hand even after production normalizes.

“We have learned how to be much more efficient,” Carter said, adding that he sees “no reason” why the company should return to its 45-day target, which was already lower than the 60 or 70 days many of its competitors set.

Still, Toyota would like to see inventory levels much higher than today’s: “Thirty days sounds like nirvana,” Carter said.

Toyota is making “incremental improvements” to its production throughput, but supply chain issues are expected to persist throughout the year.

Toyota revised its annual sales forecast for the industry downward by about 6 percent given those issues, despite high demand. According to Carter, Toyota anticipates 15.5 million light-vehicle sales in the U.S. this year, down from the16.5 million it estimated in October.

“That is an adjustment that is, quite frankly, not based on consumer demand,” he said. “It’s based solely on our projections of what the supply environment is going to be in 2022.”

The downward revision reflects the continued constraints resulting from the global semiconductor shortage, higher raw materials prices and the war in Ukraine‘s ripple effects on the supply chain.

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