Toyota lowers 2022 U.S. industry sales estimate to 15.5M as supply chain woes persist

Toyota Motor Corp. revised its annual sales forecast for the industry downward by about 6 percent as supply constraints are expected to limit the industry's ability to meet high consumer demand.

Bob Carter, head of sales for Toyota Motor North America, said the automaker anticipates 15.5 million light-vehicle sales in the U.S. this year, down from the 16.5 million it estimated in October.

"That is an adjustment that is, quite frankly, not based on consumer demand," Carter told journalists on Wednesday during a media roundtable. "It's based solely on our projections of what the supply environment is going to be in 2022."

The downward revision reflects the continued constraints resulting from the global semiconductor shortage, higher raw materials prices and the war in Ukraine's ripple effects on the supply chain.

Those issues have led to tight new-vehicle inventory, which resulted in a year-over-year U.S. new-vehicle sales decline of 16 percent industrywide during the first quarter. According to Motor Intelligence, the seasonally adjusted, annualized selling rate came in at 13.4 million in March, down sharply from 17.79 million a year earlier.

Carter said Toyota has good insight into its supply chain for the second and third quarters of this year, but the outlook for the fourth quarter remains "murky." If its assumption for fourth-quarter supply for the industry comes in too high, the annual sales tally could dip to as low as 14.9 million or 15 million, he said.

Still, the automaker is "reasonably confident" in its 15.5 million estimate.

Toyota expects to sell about 2.35 million vehicles in 2022, which would be a gain of 0.7 percent vs. last year's annual total. The automaker's first-quarter sales were down 15 percent from a year earlier.

He said the company is "cautiously optimistic" that it will hit its sales target, citing "record-high" demand, particularly for its hybrids and plug-in hybrids.

"We have a lot going for us in our favor," he said.

Toyota Motor North America's new-vehicle inventory levels remain severely low, Carter said, though the company is making "incremental improvements" to its throughput on a weekly basis. The automaker had 17 days' worth of inventory on hand as of March 1, according to the Automotive News Research & Data Center, down significantly from the 45 days the company would target in the past.

The automaker might not ever return to pre-pandemic inventory levels. Fewer vehicles on dealership lots has translated to higher profits on vehicle sales because of reduced inventory costs and low incentives.

Carter said Toyota is looking to have about 30 days' of supply on hand when the supply chain normalizes.

"I'm of the belief that after stabilization of the supply chain, I don't believe it will be necessary for us to go back to a 40- to 45-day strike zone," he said.

After beating General Motors for the first time in the U.S. new-vehicle sales race in 2021, Toyota again came in ahead of the longtime American sales leader in the first quarter. The Japanese automaker sold 5,484 more vehicles in the U.S. through the first three months of the year than its Detroit counterpart did.

Carter said beating GM in the sales race is not an indicator on which it will base its success in the future. He said the company expects its market share to decline when industry supply chains open back up, citing historical precedents during previous market downturns that resulted in higher shares for Toyota.

"Is it sustainable? I would say no," Carter said. "It's not sustainable once things normalize. And we're OK with that because we run our own business."

The automaker will not plan to boost fleet sales to bolster its new-vehicle sales totals, according to Carter. Between 8 and 10 percent of Toyota's new-vehicle sales each month are fleet, a target that will remain unchanged moving forward, he said.

"There was, surprisingly, some very large fleet numbers reported by the industry last month," Carter said. "I was surprised given current retail demand."