Toyota is to slash worldwide vehicle production by 40% in September because of the global microchip shortage.
Although the world’s largest carmaker was planning to produce almost 900,000.00 cars in February, it has reduced this number to 540,000.
Volkswagen, world’s 2nd-largest car manufacturer, warned that it might have to reduce its output.
Covid’s pandemic increased demand for chips-based appliances, like TVs, phones and gaming consoles.
Volkswagen of Germany, which had cut production earlier this year, said to Reuters on Thursday: “We expect the supply of chips for the third quarter in very volatile and tight conditions.”
“We cannot rule out additional changes in production.”
Toyota is not alone in its rivals. General Motors and Ford are among them.
Toyota has so far managed to avoid this, except for extending the summer shutdowns in France, the Czech Republic, and Turkey.
Many new cars include many microchips. However, Toyota was able to benefit from having a greater stockpile of these chips (also called semiconductors) as part of its revamped business continuity plan. This plan was developed in response to the Fukushima earthquakes and tsunamis of 2010.
Coronavirus outbreaks in Asia have prompted the decision to reduce production.
The cuts will affect Toyota’s Asian factories. A spokesman from Toyota UK, Burnaston in Derbyshire said that the Japanese cuts will not have any effect on UK production.
He said that Toyota’s overall goal was to make up any volume lost by 2021.
The chip shortage has affected a wide variety of industries, including car manufacturers and small appliance producers.
Issues started to emerge last year when Apple had to stagger the release of its iPhones, while the latest Xbox and PlayStation consoles failed to meet demand.
Every technology company has since warned about the consequences.
And last month, the boss of chipmaker Intel, Pat Gelsinger, said the worst of the global chip crisis was yet to come.
Gelsinger said that the shortage would worsen in the second half of the year and it would take “a year or so” for supplies to return to normal.
This shortage led Joe Biden, the US president to issue an executive order. Biden pledged to raise $37bn for funding legislation that would increase US chip production.
Toyota shares fell 4.4% Thursday. This is their largest daily decline since December 2018.
What is the impact of shortage on firms?
- Renault predicts that its vehicle production will fall by around 100,000 units this year.
- Sony claims it’s difficult to increase production of PS5 consoles
- Apple anticipates that the shortage will cause more problems and lead to an increase in iPhone production
- Tesla claims it uses alternative chips and rewriting technology
- Taiwan Semiconductor Manufacturing will build new plants in Japan and the USA.
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Publited at Thu, 19 August 2021 12:36.35 +0000