Toyota Sales Worsened Following Supply Chain Constraints

Toyota sales are worsening as supply chain concerns take hold, while electric vehicle (EV) startup Lordstown Motors recorded its first-ever profit and Boeing workers at three U.S. plants reached a new labour agreement. The Morning Shift for August 4, 2022 contains this and much more.

It is a difficult moment to be a car manufacturer, as supply chain problems, pandemic-related lockdowns, and the possibility of a recession loom over us all. This triple-pronged onslaught has negatively affected Toyota’s sales. Hard.

Decline in Profit

Following a 30 percent decline in sales volume in 2021, the manufacturer has now revealed a 42 percent decline in profits for the first quarter of its most recent fiscal year.

Clearly, the Japanese company’s circumstances are deteriorating significantly. Reuters has reported:

“Toyota Motor Corp’s profit decreased by 42 percent in the first quarter, worse than predicted, as the Japanese carmaker was pressured by supply limitations and rising expenses.

Toyota Sales Drop led to Dip in Operating Profit

Toyota reported on Thursday that operating profit for the three months ended June 30 fell to $578.66 billion yen ($4.3 billion) from $997.4 billion yen in the same period a year earlier, Toyota reported on Thursday, capping a difficult quarter.

Due to the global chip shortage and China’s Covid-19 restrictions, it has frequently lowered its monthly manufacturing goals.”

IMC Launches Toyota Yaris in Pakistan

The magnitude of the company’s tumbling profits was “way above expectations.” Despite introducing new models such as the electric BZ4X to the market this quarter, growing production costs and component shortages had a significant impact on the company’s revenues.

Toyota said that rising material costs have cost the company 315 billion yen ($2.36 billion).

However, the automobile manufacturer does not believe this dismal luck will last long. Toyota’s output will increase in the second half of the year, a company representative told Reuters. In addition to maintaining its expectation for full-year operational profitability, the company reiterated its goal of producing 9.7 million vehicles for the current fiscal year.

But as Toyota sales were experiencing a significant decline in revenue, an improbable EV manufacturer achieved its first-ever profit. Lordstown Motors, a troubled startup, made a profit in the first quarter of this year after selling assets including its Ohio assembly line to Foxconn, a Taiwanese contract manufacturer. Reuters reports:

“During the April-June quarter, the EV manufacturer made a profit of more than $100 million on the sale of its Ohio assets. The sale was spurred by the need for cash in the face of industry-wide supply chain disruptions and escalating material costs.

This resulted in a net income of $63.7 million, compared to a deficit of $108.2 million the previous year.

The EV manufacturer claims its all-electric Endurance pickup truck will absolutely, perhaps enter production by the end of the year. Earlier this year, though, the manufacturer issued a warning that it was depleting its financial reserves at an alarming rate.

Lordstown Motors had a $587 million reserve in 2021, which was used to design and manufacture the all-electric truck. In contrast, by March of this year, the amount had dropped to $203.6 million. It was believed that the selling of its Ohio plant to Foxconn would provide a short-term boost to the company as it approached the last barriers needed to get its truck on the road.

This morning, Lordstown Motors was not the only automaker with something great to report. According to Automotive News, Japanese automaker Subaru reported a 24 percent increase in profits during its most recent fiscal quarter as the company “recovered lost production, increased sales, and capitalised on advantageous exchange rates.”

According to the website, Subaru’s operating profit for the fiscal first quarter ending June 30 was 37 billion ($271.3 million). Subaru stated that this increase was a consequence of increased sales as the company “gradually overcome production constraints caused by the Covid-19 epidemic and worldwide semiconductor shortage.” The following is an excerpt from Automotive News:

“During the period of April to June, global production climbed by 12 percent to 205,000 vehicles, contributing to a 12 percent growth in global sales to 196,000 vehicles.” Subaru regained its footing as a result of the turnaround, as it had previously struggled to meet the high demand for its products.

“The greatest boost to Subaru’s profitability came from the Japanese yen’s significant depreciation versus foreign currencies, particularly the U.S. dollar.”

Subaru CFO Katsuyuki Mizuma has dismissed rumours of a U.S. recession as the company’s fortunes continue to recover from the pandemic’s effects. Mizuma stated that demand for Subaru automobiles “remains solid” in the United States and that the company was “racing to fill approximately 50,000 back orders”

Mizuma emphasised that low productivity continues to be Subaru’s greatest obstacle.

This year, Toyota made a big deal about its first electric vehicle, the Subaru-produced BZ4X. Toyota has thus far delivered about 3,000 electric SUVs to U.S. customers. However, its launch has been plagued with problems, and the business is now offering to buy back recalled automobiles.

After just two months on the market, Toyota announced a recall of the BZ4X due to wheels that could detach while the vehicle is in motion. Toyota’s battery-powered future has not gotten off to a fantastic start.

Now, Electrek reports that the company is offering to buy back defective units while the recall continues to stall. According to the website,

“At the end of June, Toyota issued the recall of the bZ4X, citing the possibility that the new EV’s wheels could fall off. Even though all bZ4Xs were affected, the recall is still very limited, affecting only 2,700 vehicles because it occurred so soon after the car’s debut.

Given the scope of the offer, the recall does not appear to be going well.

The letter, a copy of which was obtained by Electrek, requests that EV owners refrain from driving their vehicles until Toyota pursues a solution.

Toyota will hold recalled automobiles and provide impacted customers with loaner vehicles while it investigates a solution. If you don’t like the sound of the manufacturer’s ideas, they will reimburse your fuel costs and even buy back the vehicle.

According to Electrek, the issue also affects the Subaru Solterra, but it does not appear that deliveries of this model have begun in the United States.

Boeing employees at three U.S. facilities have agreed to a new contract just weeks after threatening strike action. More than 2,500 workers at the Midwest facilities of the aerospace giant voted to approve a contract that, according to their union, will increase pay by an average of 14% over three years and include inflation adjustments.

Earlier this week, according to the Associated Press, members of the International Association of Machinists and Aerospace Workers at Boeing operations in St. Louis, St. Charles, Missouri, and Mascoutah, Illinois, agreed to the contract. The website claims:

“According to the union, the new contract includes a provision from the rejected deal requiring employer contributions of up to 10 percent to employees’ 401(k) retirement plans, as well as an additional $8,000 lump-sum payout that can be deposited into the employee’s account. “According to the union, it also includes enhancements to sick leave and parental leave, but makes no changes to health insurance coverage for workers.”

The sites at issue are associated with Boeing’s military activities. Due to the ongoing pandemic, the company has struggled to fill order books for its commercial jets, but its defence and space operations have been growing.

The AP estimates that this sector accounted for approximately 38% of Boeing’s overall income in the first half of this year.