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Toyota to Shut Manufacturing Plant in Russia

Industry: Vehicle Manufacturing
Current: Company Performance

Toyota announced that it would stop producing vehicles at its plant in Russia
Toyota's luxury division, Lexus, has also seen significant reduction in sales due to Russia’s invasion of Ukraine
Several automakers stopped production in Russia in response to the ongoing conflict in Ukraine

Overview of Toyota’s Plant in Russia

Toyota announced that it would discontinue production of vehicles at its plant in Saint Petersburg, Russia. The move comes after the automaker decided to stop operations at the facility in March 2022. Toyota was one of many automobile manufacturers that paused or stopped work at their plants in Russia. The companies took the decision in response to Russia’s invasion of Ukraine and the subsequent trade restrictions imposed on it.

In a statement, Toyota said that it stopped operations at the factory in March due to an interruption in the delivery of critical materials and parts. However, the company said that it did so with the hope that operations at the facility that produces the RAV4 and Camry will eventually restart. But, having waited for six months, the company claims that there are no signs of the situation in Russia getting better. As a result, Toyota decided to terminate its employees, and has no plans to restart the plant.

Why Automakers are Suspending Operations in Russia

The automotive industry in Russia is dependent on foreign investment, and automobile sales started to decline from August 2021. Daimler, Ferrari, Ford, Hyundai, Mercedes-Benz, Nissan, Stellantis, Renault, Toyota, Volkswagen, and Volvo are among the automakers that stopped production in Russia in response to the ongoing conflict in Ukraine.

According to GlobalData, the sales of Toyota’s light vehicles in Russia dropped 75.9% in FY2021 over that in 2020. Toyota's luxury arm, Lexus, also suffered as a result of Russia’s invasion of Ukraine. The automakers working in Russia stopped production after President Vladimir Putin's invasion of Ukraine led to restrictions that crippled supply of parts.

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