The automaker will reduce output again in November, but the impact will not be as painful as before and Toyota sees signs of recovery on the horizon.
Toyota said domestic production fell in July, outweighing record overseas production that was driven by a strong recovery in Europe, China and the rest of Asia.
Honda blamed delays in receiving parts and logistics due to COVID-19 and semiconductor shortages for the reduced output at two domestic plants.
Toyota's global production plan for June stands at about 850,000 vehicles, a cut of about 100,000 vehicles.
Toyota said there was "a possibility" that it could lower its full-year production plan of 9.7 million vehicles as it faces a continuing shortage of parts due to the COVID-19 lockdowns in China.
The letter, dated May 1 and addressed to local authorities in Shanghai's Lingang Special Area, outlined the lengths to which the city went to help Tesla, indicating the U.S. automaker's importance to Shanghai.