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Toyota Asked Suppliers To Lower Prices Due To The Pandemic

Toyota Asked Suppliers To Lower Prices Due To The Pandemic

Leading Japanese carmaker Toyota Motor has asked several of its suppliers to lower prices for components due to poor sales and a trend to reduce costs amid the coronavirus pandemic.

Toyota sent requests to companies that sell parts made of a certain type of steel, including engine and suspension components. Prices for raw materials for their manufacture have decreased compared to last year due to the situation with coronavirus. Usually, pricing is agreed with suppliers in April, when the fiscal year begins, or six months later in October, but the General state of Affairs has forced Toyota to review this policy.

The concern intends to conduct individual negotiations with each of the suppliers and will not ask for a single price. As the Nikkei notes, several companies that produce parts also suffered losses during the pandemic and may not make concessions.

At the end of the 2019 fiscal year (ended in March 2020), Toyota Motor and the Toyota group of companies manufacturers Daihatsu Motor and Hino Motors became world leaders in new car sales, selling 10.45 million units of cars and trucks. The sales of the primary competitor, the German concern Volkswagen, and its group of companies for the same period amounted to 10.37 million vehicles.

However, during the pandemic, Toyota production worldwide fell by more than 50% in some months, and several factories had to be temporarily closed due to restrictive measures in a particular country. According to forecasts, the carmaker, its operating profit will fall in the 2020 financial year (ending March 31, 2021) by 79.5%, to 500 billion yen (about $4.6 billion). The Corporation also expects that the level of car sales in the current financial year will decrease by 14.9% to 8.9 million units.

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