People with knowledge of Toyota Motor’s operations claim that the manufacturer repeatedly halted production at a Mexican factory in February and March. Local labor shortages at suppliers hindered output, forcing these interruptions.
The stoppages show a potential choke point for the top automaker in the world, which aims to produce 10 million vehicles this year. The facts of the stoppages were confirmed by records from Toyota and suppliers that Reuters reviewed.
Toyota halted production of the Tacoma pickup truck at its Tijuana, Mexico plant for 19 days in February and March, according to two sources. Consequently, this disruption impacted the plant’s output during those months. They added that technical problems at the factory also contributed to the stoppage.
Four employees of Toyota and suppliers were contacted by Reuters. Since the information hasn’t been made public, each of them chose not to be named.
To lessen the burden, Toyota is currently collaborating with select suppliers. Nevertheless, personnel scarcity is making it difficult for some component makers to maintain production, according to one of the persons.
The Japanese manufacturing behemoth has been dealing with the aftermath of a safety test certification scam at affiliate Daihatsu and governance issues at two other group companies. Now, it is also facing supply shortages.
As a result of these incidents, the manufacturer decided to postpone the start of electric vehicle production in the US by six months, to around June 2026. According to two of the persons involved, this decision was made to address concerns and ensure optimal production conditions. Japanese media has already reported on the EV delay.
The automaker’s affiliate, Toyota Motor North America, responded to concerns from Reuters by saying: “Production delays at Toyota’s North American factories are still occurring occasionally because of supply chain problems. Our teams are working hard to minimize the impact and make every effort to minimize the disruption to our consumers.”
“REGULAR HALTS”
In a late-April letter obtained by Reuters, the manufacturer acknowledged that “frequent production halts” were causing “inconvenience and concern” to its North American supplier network.
The statement highlighted that frequent employee turnover at some suppliers led to a drop in skills. Additionally, it mentioned that “issues with personnel, equipment, and material supply” had caused a decrease in production capacity.
The automaker requested parts manufacturers to provide information about the difficulties they faced in North America. They also asked for details regarding the kind of assistance they needed.
Reuters was unable to ascertain whether the labor concerns were affecting the Japanese automakers’ suppliers who were manufacturing in the US.
Despite increasing demand for cars, particularly hybrids, Toyota has encountered difficulties in the US recently. Some of these challenges can be attributed to supply-chain problems. It is anticipated that Toyota will introduce the hybrid Tacoma to the US market this year.
At earnings briefing last week, Yoichi Miyazaki, Toyota’s chief financial officer, stated, “There were some operational issues involving parts makers, and it became clear in the fourth quarter that production was not going as expected.” The automaker was also impacted by one-time costs related to production changes.
Toyota reported an operating loss of 27.5 billion yen ($176 million) for the period of January to March last week, despite overall record profitability.
Toyota has predicted a 20% drop in profits for the current fiscal year, attributing the reduction to supplier and strategic investments.
As North America’s robust economic expansion continues and pay rates rise, people are leaving heavy sector jobs for ones with better circumstances. This has led to increased turnover in these sectors.
“Employees are frequently changing jobs in search of higher salaries. It has become difficult to secure personnel, and we can no longer maintain the required production volume,” said one of the sources, who works at a supplier.
Over 230,000 Tacomas were sold by Toyota in the US last year, accounting for roughly 10% of the brand’s overall sales in that country. Only the Camry and RAV4 sold better.
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