Toyota asks some parts suppliers to lower prices

According to foreign media reports, as Toyota expectsproductionto resume soon, the company is asking some parts suppliers to cut prices in the third quarter.Toyota works with suppliers to control costs and asks them to share some of the savings in the form of price cuts — typically around 1 percent a year, depending on how other measures progress, among other things.

Image credit: Toyota

Toyota typically negotiates prices with suppliers twice a year, the first in April and the second in October.But this spring, Toyota did not ask suppliers to cut prices.Since about last fall, Toyota has cut production plans several times, and suppliers have had to adjust and face heavy labor and material cost burdens.

Toyota now expects production to pick up by the second half of the fiscal year (this fiscal year: April 2022 to March 2023) and has notified some suppliers by June 23 in the hope that they will lower prices.Price reductions are determined based on each supplier's supply and financial situation.

In addition, Toyota wants to support stressed suppliers, including taking on more costs for materials, energy and logistics, as well as paying suppliers for inventory that is expected to increase in production.

Under the plan announced on June 22, Toyota expects to produce 800,000 vehicles globally in July, up from about 770,000 a year earlier, but down 50,000 from the production plan it told suppliers at the beginning of the year.Toyota expects its global monthly average production in the second quarter to be about 850,000 vehicles, matching an all-time high.