Toyota Motor Corp, the world’s largest automaker by sales, announced on Tuesday that it will halt operations at all of its 14 assembly plants in Japan due to a malfunction with its production system. The suspension is likely to affect around a third of Toyota’s global output and cause significant losses for the company.
What Caused the System Failure?
According to a Toyota spokesperson, the system failure occurred on Monday night and prevented the company from ordering components from its suppliers. The spokesperson said that the cause of the problem was still under investigation, but it was “likely not due to a cyberattack”.
The system failure affected all of Toyota’s domestic plants, including those that produce popular models such as the Corolla, Prius, RAV4, and Lexus. The company said that it was unclear how long the suspension would last and how much output would be lost.
How Will the Suspension Impact Toyota’s Business?
The suspension comes at a time when Toyota’s Japanese production had been recovering from a series of reduced output plans due to semiconductor shortages. In the first half of the year, Toyota’s domestic production increased by 29%, the first such rise in two years.
However, the system failure could jeopardize Toyota’s profitability and market share, as well as its reputation for quality and reliability. Analysts estimate that the suspension could cost Toyota around $100 million per day in lost revenue.
Toyota’s shares fell by 0.3% in early Tokyo trade on Tuesday, while its rivals Honda and Nissan gained 0.6% and 0.9%, respectively.
How Will the Suspension Affect Customers and Suppliers?
The suspension could also have negative consequences for Toyota’s customers and suppliers, especially those who rely on just-in-time delivery and inventory management. Customers who have ordered or reserved Toyota vehicles may face delays or cancellations, while suppliers who provide parts and materials to Toyota may face reduced orders or payments.
Toyota said that it will try to minimize the impact on its customers and suppliers by resuming operations as soon as possible and utilizing its existing stockpiles. The company also apologized for any inconvenience caused by the suspension and asked for understanding and cooperation.
What Are the Implications for the Auto Industry?
The suspension highlights the vulnerability of the auto industry to system failures and disruptions, which can have ripple effects across the supply chain and the market. The auto industry is increasingly dependent on complex and interconnected systems that manage production, logistics, sales, and service.
In recent years, the auto industry has faced several challenges due to system failures, such as cyberattacks, natural disasters, power outages, labor strikes, and pandemics. These challenges have exposed the need for more robust and resilient systems that can prevent or recover from failures quickly and efficiently.
The suspension also underscores the importance of diversifying and optimizing production capacity across different regions and markets. The auto industry is facing growing demand for electric vehicles, autonomous vehicles, and mobility services, which require different technologies and capabilities. The auto industry needs to balance its global and local production strategies to meet these diverse and changing needs.