Toyota lowers 22-year US new car sales forecast on supply chain issues

Bob Carter, executive vice president of sales for Toyota Motor North America, speaks during a Toyota press conference at CES 2019 in Las Vegas, Nevada, US, Jan. 7, 2019. REUTERS/Steve Marcus

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DETROIT (Reuters) – Toyota Motor Co. (7203.T) on Wednesday lowered its 2022 forecast for new vehicle sales in the U.S. auto industry, citing supply chain difficulties caused by the pandemic and conflict in Ukraine.

Bob Carter, executive vice president of sales for Toyota Motor North America, said on a conference call that the Japanese automaker’s new forecast of 15.5 million vehicles was lower than its previous forecast of 16.5 million.

“The supply chain challenges that we’re seeing… will stay with us for a while,” he said.

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The global auto industry was already hit by the COVID-19 pandemic and the ensuing shortage of semiconductor chips even before the Russian invasion of Ukraine disrupted parts of the supply chain and contributed to soaring prices for raw materials such as aluminum and nickel.

Carter said first-quarter US industry sales averaged 14.3 million year-over-year, but he was “reasonably confident” of the new forecast. However, he said there is a “downside scenario” of 14.9 million to 15 million sales if supply chain difficulties persist.

Carter emphasized that US sales forecasts are not dependent on demand as a mid-16 million sales rate could be achieved if automakers could build that many vehicles.

“This is an adjustment that frankly does not depend on consumer demand,” he said. “It just depends on what our expectations for the supply environment will be.”

Carter said Toyota expects sales of the Toyota and Lexus brands in the United States this year to end at about 2.35 million vehicles.

While Carter expects some of the higher raw material costs to be passed on to consumers, he doesn’t see the car’s affordability as an issue this year. He said it will take six months for inventory rates to return to normal after the supply chain recovers.

Today’s Toyota supply of cars in the US is now less than two, versus a historical average of 40 to 45 days. This is expected to recover for 30 days as the supply chain recovers.

“Cars are literally sold before they are built,” he said.

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(Ben Kleiman reports in Detroit). Editing by Kirsten Donovan

Our Standards: Thomson Reuters Trust Principles.

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