Toyota to cut production by 40 percent as chip shortage wreaks havoc in auto industry

The corona pandemic is now also affecting the world’s largest car manufacturer. Vehicle parts from Southeast Asia are in short supply – and the global semiconductor shortage is exacerbating production delays.

Toyota Motor Corporation, the world’s largest automaker, will cut its global production by 40 percent or around 360,000 vehicles in September. Toyota cited the shortage of vehicle parts as one reason for the cut, because the spread of the coronavirus in Southeast Asia is causing production losses there. In addition, the global shortage of semiconductors is gradually making itself felt at Toyota as well.

On the Tokyo Stock Exchange, the news was registered at discounts for Toyota and for affiliates. The stock price of Toyota Motor went down 4.4 percent.

While major car competitors such as Volkswagen from Germany or Ford from America have repeatedly complained about the shortage of semiconductors and restricted their production since the beginning of the year, Toyota had largely avoided such restrictions so far. The company learned lessons from the tsunami disaster in northeastern Japan in 2011, after the shortage of vehicle parts had long depressed production in Japan. With far-sighted planning and larger stocks of important parts, Toyota has been able to avoid the shortage of microchips so far.

Now, however, production downtimes are increasingly pressing in supplier plants in Southeast Asian countries such as Thailand, Malaysia and Vietnam, where the corona virus is spreading rapidly. Toyota therefore stated on Thursday that 27 of 28 production lines in Japan will have to temporarily suspend by September. The production of the RAV4, Corona, Prius, Camry and Lexus RX models is affected. Of 15 plants in Japan, only one is not affected.

“Especially in Southeast Asia, the spread of Covid and lockdowns are impacting our local suppliers,” said Toyota Purchasing Manager Kazunari Kumakura. Toyota will make sure in future to diversify its supply chain even more spatially. In the weeks before, Toyota had announced minor production stoppages due to missing parts deliveries. Last month, Toyota extended a production stop in Thailand because parts were missing as a result of the Covid pandemic.

~ Source Bloomberg

Author: Nabeel K

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