NAGOYA — Toyota Motor is asking certain parts companies to cut prices for the July-September quarter, returning to its customary requests now that it expects output to recover soon.
The Japanese automaker works with suppliers to curb costs and asks them to share a portion of the resulting savings in the form of price cuts — typically about 1% per year, depending on progress in rationalization and other steps.
The carmaker skipped this move in the spring, after repeated downward adjustments to its production plans since around last fall put a heavy burden on suppliers in terms of labor and materials that had to be adjusted as Toyota changed plans.
Now Toyota sees a recovery in output toward the second fiscal half and had informed some suppliers by Thursday of its desire for lower prices. The reductions are determined based on each supplier’s offerings and financial condition.
In a separate move, the Japanese company wants to give support to suppliers particularly feeling the squeeze. Such assistance will include covering higher costs for materials, energy and logistics, as well as paying for storage that suppliers have secured in anticipation of output increases.
Toyota typically negotiates prices with suppliers twice a year: for the first fiscal half, which starts in April, and for the second half, which runs from October. It did not make an April-June request this year.
Toyota expects to build 800,000 vehicles worldwide in July under plans announced Wednesday. While this exceeds the roughly 770,000 produced a year earlier, the company said it is down 50,000 from what it told suppliers at the start of 2022. For the July-September quarter, the company sees global production averaging around 850,000 units a month, on a par with its all-time high.