Toyota, which “picks the door”, has been “cautious” about parts suppliers. Toyota has asked Chinese parts makers to cut prices as demand for new cars has been depressed as a result of the outbreak, Nikkei news agency Nikkei reported.
The Nikkei Chinese reported that Toyota had asked parts makers such as engines for price cuts through documents and so on. Toyota believes that the price of some special steels, such as engines and parts for the driving parts, is down by about 7,000 yen (about 464 yuan) per ton compared to the second half of 2019 (October 2019-March 2020), and therefore requires a reduction in the prices of components that use the corresponding special steels. Previously, Toyota communicated with parts suppliers twice a year (april and October) to adjust prices, but mid-way price cuts were rare.
In addition, Toyota is concerned that the deterioration of the operations of parts companies has disrupted the supply chain, suggesting that even the same parts will not set a uniform purchase price, but through negotiations with individual enterprises to decide.
Under the influence of the epidemic, Toyota, which had suffered from a setback in profits, began to “shrink its clothes”.
In fiscal 2020, Toyota reported a 127,000-vehicle reduction in sales and a 380 billion yen decrease in net revenue and a loss of 160 billion yen in operating profit between April 1, 2019 and March 31, 2020. The negative impact of the outbreak was mainly reflected in the fourth quarter, when Toyota’s revenue fell 8.4% year-on-year to 7.1 trillion yen, operating profit fell 28% year-on-year to 384 billion yen and net profit fell 86% to 63.1 billion yen.
Toyota said April would be the lowest month for its business and conditions were improving in the US, Europe, China and other markets. But business is back to normal, especially in the U.S., perhaps until the end of this year or early next year. Toyota forecasts sales of Y24, 000bn in fiscal 2021 and an operating profit of Y500bn.
Toyota plans to delay the release of some of its new models because of the outbreak, but it does not plan to scale back its huge investment in next-generation technology, with research and development spending stabilizing at Y1.1 trillion, up from 3.7 per cent to 4.6 per cent of total revenue. Although Toyota’s ample cash reserves could help it through a tough year, it has sought a total of $9bn in credit lines from Japan’s Mitsui Bank to cushion rising funding costs caused by the outbreak.