AutoBeta(AutoBeta.net)07/27 Report--

Under the impact of the COVID-19 epidemic, the global automobile industry has experienced a historical low ebb, new car sales have continued to decline, automobile manufacturers and parts suppliers have suffered losses, and performance deterioration is inevitable. Taking necessary measures has become part of the loss reduction plan of some enterprises. Toyota will adjust the purchase price of spare parts to reduce costs due to low demand for new cars due to the epidemic, Japanese media reported.

Toyota has asked some parts suppliers to lower parts prices, the Nippon Keizai Shimbun reported on July 27. Toyota has previously negotiated price adjustments with parts suppliers twice a year, in April and October, but it is rare for Toyota to suddenly ask parts suppliers to cut prices.

It is understood that Toyota has put forward price reduction requirements to suppliers of engines, driving parts and other parts through documents and other forms.

Among them, Toyota proposed to special steel suppliers to reduce the purchase price because of the "price reduction of raw materials." Toyota believes that the price of some special steel, such as engine and driving parts, is about 7,000 yen per ton lower than in the second half of 2019 (October 2019 to March 2020). Therefore, the corresponding special steel parts are required to reduce the price.

The report pointed out that Toyota has business relations with about 40,000 companies, and the price reduction requirements may have an impact on the earnings of these enterprises. In particular, under the continuing impact of the epidemic, it will further lead to the deterioration of the performance of parts manufacturers.

At the same time, the extent to which parts suppliers will accept Toyota's price reduction request is also unknown. Toyota is also worried about the deterioration of the operation of major parts companies, resulting in disruption of the supply chain, so it has put forward a flexible plan, that is, the same parts will not set a uniform purchase price. but through negotiations with individual companies to determine the policy.

Toyota is one of the most profitable carmakers in the world, and the acceleration of start-up cost cuts is reflected in the deterioration of performance caused by the expansion of the epidemic.

In may, Toyota said it expected operating profit to fall 80% to 500 billion yen (33.16 billion yuan) in fiscal year 2020 (April 2020 to march 2021), the worst performance in nine years.

Toyota achieved sales of 29.9299 trillion yen (1.985 trillion yuan), down 1.0 percent from a year earlier, and realized operating profit of 2.4428 trillion yen (162 billion yuan), down 1.0 percent from a year earlier, according to its financial results for the fiscal year 2019 (April 2019 to March 2020). Net profit was 2076.1 billion yen (137.7 billion yuan), up 10.3 percent from the same period last year.

The epidemic seriously affected Toyota's performance in the fourth quarter (January 2020 to March 2020), with Toyota's net profit plunging 86% to 63.1 billion yen (4.185 billion yuan) in the fourth quarter.

Since the outbreak in the first quarter of this year, car factories around the world have been shut down one after another in response to low demand for new cars and the spread of the virus. Toyota once closed all factories in Europe, North America, the Philippines and Malaysia, while Japanese factories were temporarily closed due to the presence of confirmed employees. As the epidemic was gradually brought under control, auto factories around the world began to return to normal operations. Not long ago, Toyota announced that it had resumed operations at all its factories around the world.

The epidemic caused factory production losses, while low demand for new cars also led to a sharp drop in sales. Affected by the spread of the COVID-19 epidemic, Toyota's global production in May was 365909 vehicles, down 54.4% from a year earlier, the biggest decline since 2004. Toyota's global sales in May were 576508 vehicles, down 31.8% from a year earlier.

Toyota also expects car sales to fall by 20%, or 1.95 million units, in fiscal 2020, and the impact of the pneumonia epidemic has exceeded that of the 2008 financial crisis.

At present, the global automobile industry is still hit by the epidemic, and a number of auto companies have seen a sharp decline in sales and profits, so it is imperative to reduce costs. Toyota's move to ask parts suppliers to cut prices collectively may cause other carmakers to follow suit.

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