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Chip shortage forced Toyota to impose quotas on Lexus orders in Japan.

Published: 2023-01-18

If the first year of shortages in semiconductor chips in the auto industry taught buyers anything, it was the willingness of manufacturers to prioritize the release of the most expensive and profitable models. In this context, the behavior of the largest automotive corporation Toyota Motor in the home market of Japan, where it decided to limit the quotas for ordering premium Lexus cars to local buyers, is not quite typical in this context.

Quotas, according to the Nikkei Asian Review, will be introduced on order for all ten Lexus models offered in Japan. Each dealer will receive a certain number of cars available for order, and if the quota is chosen, then customers simply will not be able to purchase an additional number of cars beyond this limit. Delivery times for Lexus vehicles on order already exceed six months, while Toyota's more mainstream models are not subject to such restrictions, and delivery times can at least be predicted with high accuracy. The corporate information system allows Toyota dealers to pre-estimate the delivery time of cars of this brand ordered for production in 22 cases out of 37, if we talk about the range of models in the Japanese market.

Toyota is going to introduce a new order planning system this spring, which will generate information on delivery times for all models by the end of the year. Now it is possible to predict the delivery time of a particular car with high accuracy only after the fact of its release from the assembly line is confirmed. From January to November last year, sales of Toyota vehicles in Japan decreased by 13%, while outside the country they even grew by 2%. In the local market, cars with a high content of electronic components are more in demand, and a shortage of chips prevented them from producing enough of them. From January to March of this year, Toyota is going not only to increase the production of cars for the home market, but also to redirect to it some of the cars that were originally intended for export.

Toyota does not disclose the volume of production of Lexus brand cars, but from third-party sources it is known that the specific profit from their sale reaches $11,600 per copy. That's about twice as much as the profit from every mass-produced Toyota car sold, like the Corolla. Going forward, the company plans to switch to long-term contracts with semiconductor suppliers to avoid supply disruptions.