Toyota has broken all historical records in terms of car production and sales, notably thanks to its famous self-charging hybrid vehicles. However, after being the number one company in almost every area, Toyota management believes it is time to take a break and stop pushing the machine to beat its own numbers year after year. In other words, they believe Toyota should stick to maintaining its positive operating numbers and not climb the ladder, as it has done in recent years.
As Toyota management emphasizes, the company will move from “sprint mode to marathon mode.” Thus, according to Automotive News Europe, the brand will review its production rate and establish a new “cruising speed” for the next fiscal year.
toyota yaris cross
Toyota has managed to ensure that demand for its hybrid cars exceeds its own production capacity.
Toyota’s new production strategy
This new strategy is announced just weeks after Toyota announced new production and sales records in 2023. At the same time, during that same year, it also increased pressure on its various factories to respond to the stagnation of the demand for hybrid vehicles. According to them, demand far exceeded the brand’s production capacity and they tried to overcome this problem by increasing the speed of their factories.
But, as Yoichi Miyazaki, Toyota’s executive vice president and chief financial officer, says, “being in turmoil for a long period of time carries great risks.” Over the past few months, employees have been overworked, as have suppliers and affiliated companies, who have reported problems with production times, which can compromise the quality of the products themselves. “We look at the past year as if we were speed runners. We need initiatives that allow us to run a marathon,” he said.
By 2024, the brand will evaluate and adjust production levels. “In terms of pace, we will reassess and review our ideal cruising speed,” Mr. Miyazaki said. To this end, Toyota will examine the workload and work pressure in each of the Japanese company’s divisions and reduce them as much as possible to give “fresh air” to its workers.
In general terms, the Japanese goal is to “reduce the pace of work to a sustainable level.” Concretely, in 2023, the Toyota group has signed for a total of 11.51 million cars produced, or 8.6% more than the previous year of 2022.
Toyota expects to end its fiscal year with an operating profit of $34.7 billion.
However, despite this reshuffle aimed at easing pressure on the company’s various divisions, the Toyota Group will remain focused on achieving sufficient operating profits in the next financial year. For reference, for its fiscal year ending March 31, 2024, it expects to make an operating profit of $34.7 billion.
For now, this is just the presentation of an idea by the brand’s general management. The details and concrete effects will be announced later, closer to the end of the fiscal year.