Toyota hit by massive system glitch, 12 factories halt production in Japan

Kyoto, Japan

Japanese auto giant Toyota said Tuesday (August 29) it halted operations at 12 of its 14 factories in Japan owing to a ‘system glitch’. The company claimed it did not appear to be a cyberattack.

“Twelve vehicle factories, affecting 25 lines, are not able to process orders for parts due to a system glitch… At this point, we believe it is not a cyberattack,” a Toyota spokesman told AFP.

The glitch reportedly began Tuesday morning. Toyota refrained from sharing more details but added, “We will continue to investigate the cause of the matter and will restore it as soon as possible.”

It was not clear when normal production was expected to resume. Also, the company did not make it clear whether or not factories abroad were affected.

Toyota’s two factories in the country are still operational. One factory in the southern Kyushu region and a subsidiary Daihatsu’s factory in Kyoto did not experience any glitches.

Toyota stocks plunge

The unexpected glitch caused Toyota's stocks to drop 0.64 per cent, to 2,421.0 yen, pushing them into negative territory. The downward trend seemed to ease before the midday pause in Tokyo's market activity.

In the previous year, Toyota had to halt operations across its domestic factories due to a cyberattack on one of its subsidiaries.

Watch: Toyota’s net income surges by 75%

As one of Japan's most significant and esteemed companies, Toyota's manufacturing operations have a considerable impact on the nation's economy.

Toyota is renowned for its remarkable efficiency and the "just-in-time" production system, which involves delivering small batches of essential components during various stages of assembly. While this strategy reduces costs and enhances efficiency, it also carries significant risks.

Despite facing pandemic challenges and global chip shortage, Toyota managed to maintain its position as the world's top-selling automaker for the third consecutive year in 2022.

Toyota financial outlook

In the fiscal year leading up to March 2024, Toyota aimed to achieve a net profit of 2.58 trillion yen ($17.6 billion), marking a 5.2 per cent increase from the previous year. The company also targeted sales of 38 trillion yen.

Major automakers have experienced a strong surge in global demand following the slowdown caused by the COVID-19 pandemic. Shortages of semiconductors, however, have constrained production capacity for various products, including cars and smartphones.

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While Toyota reported improvements in chip supplies and efforts to restore production to normal levels by working closely with suppliers and raising product prices, the company still faced challenges in delivering new vehicles to customers on time.