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July 26, 2022

Toyota won’t ask suppliers for price cuts – report

Earlier requested lower prices for July-September

By Graeme Roberts

Toyota Motor would not unilaterally press suppliers for lower prices for the second half of its fiscal year and was also considering supporting their energy bills, an executive has said.

The automaker had initially sent out a request for lower prices for the July-September period to some suppliers, but the company decided not to make a request to cover the October-March period since its production plan had yet to stabilise, Kazunari Kumakura, Toyota’s purchasing group chief, said, according to Reuters.

It also did not make a request for the April-June period.

The news agency noted the move reinforced Toyota’s attempt to shoulder more of the burden faced by suppliers as global supply chain woes continue and energy costs soar.

Toyota has been battered by the global shortage of semiconductors and COVID-19-related lockdowns, prompting repeated cutbacks in vehicle production and frustrating suppliers.

“As other automakers are drastically reducing production, there are many suppliers whose sales and operations are supported by Toyota’s volume, so I believe it is necessary to respond to the voices of such suppliers,” Kumakura told Reuters.

Toyota was also considering ways to assist suppliers with rising electricity and gas costs.

Facing “unprecedented” hikes in raw material costs, Toyota in May projected material costs to more than double to JPY1.45 trillion (US$10.64 billion) this business year, potentially slicing 20% off full-year profit, Reuters noted.

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