Toyota slashing production, but not at its S.A. plant

SAN ANTONIO — Toyota’s San Antonio pickup plant is the automaker’s only North American factory that will be spared from production cuts that go into effect this month.

The Japanese car company said Thursday it expects to slash vehicle production in North America by between 40 and 60 percent as it struggles with COVID-19 outbreaks that are hobbling suppliers and shortages of semiconductor computer chips and other parts.

The automaker isn’t cutting production at its South Side plant — where it assembles the Tundra and Tacoma pickups — because of its planned rollout of the newly remodeled 2022 Tundra, Toyota spokeswoman Melissa Sparks said.

“In order to meet our production timeline and schedule for the new Tundra, we have to finish up current model production by a certain timeline,” she said. “If we’re delayed because of chip shortages, we can’t meet those milestones. So that’s the reason we’re prioritizing chips” for the San Antonio plant.

Toyota’s 13 other North American factories are expected to make between 60,000 and 90,000 fewer vehicles in August than previously planned.

The automaker also expects to reduce global production by 360,000 vehicles in September, or about 40 percent. In North America, the company is projecting that it will build 80,000 fewer vehicles next month, or roughly half of its typical monthly production.

North American factories usually produce just over a fifth of Toyota’s global vehicle output.

A Toyota spokesman said the company doesn’t expect employment to be affected by the move.

The semiconductor supply shortage has been a chronic problem for carmakers since the pandemic disrupted supply chains last year.

Semiconductor chips are used in virtually all digital consumer products, and they’re needed for numerous systems in vehicles, from entertainment to driver assistance.

Consumers sought electronic devices for use at home during the onset of the pandemic last year, and car manufacturers last spring expected vehicle demand to vanish. Semiconductor supply chains have been unable to catch up after demand rebounded last year faster than anticipated.

In Japan, the shortage is forcing Toyota to suspend production at 14 plants. The automaker is expecting to build 140,000 fewer vehicles in Japan next month, and 140,000 fewer at factories in Europe and China.

“This is far beyond just microchips, although microchips are the center of most of this activity,” Bob Carter, executive vice president of sales at Toyota North America, said Thursday on Bloomberg Television. “But we’re seeing a wide range of supplier disruptions due largely to continued outbreak of COVID.”

BMW AG recently warned of uncertain months ahead as the global chip shortage worsens. After saying early this year it had ordered enough semiconductors and expected its suppliers to deliver, the German automaker now expects to cut vehicle production in the last few months of 2021.

Daimler AG, too, dialed back its production forecast due to the shortage.

American automakers such as Ford and General Motors also have slashed production at some of their plants.

The supply problems challenging Toyota and other auto manufacturers have led to tight inventories for car buyers. The low supply has sent new vehicle prices soaring this year.

In July, the average price in the U.S. for a new automobile was $42,736, according to Kelley Blue Book — marking the fourth month in a row that new vehicle prices broke all-time records. New car buyers are paying 8 percent more for a vehicle on average than in July 2020.

While the supply crunch isn’t affecting Toyota’s San Antonio plant, the South Side facility will undergo some changes soon.

Toyota will suspend production of the popular Tacoma midsize truck by the end of this year. In its place, the factory will produce the Sequoia SUV beginning in 2022.

Toyota is shifting its Tacoma assembly line to a plant in Mexico.

Sparks said little will change at the factory when it switches to assembling Sequoias, and workers’ shifts will stay the same.

The Tacoma is one of Toyota’s best-selling vehicles. Through July, the automaker had sold nearly 163,000 Tacomas in the U.S., an increase of 34 percent compared with the first seven months of 2020.

Meanwhile, dealers in the U.S. had sold just over 5,000 Sequoias as of July.