Home >Companies >News >Toyota to cut September production by 40% as Covid chokes semiconductor supply

Toyota has announced plans to cut global production in September by 40 per cent compared to earlier plans as Covid-19 constricted supply of semiconductors. The Japanese automobile behemoth became the last major industry player to reduce output due to this reason.

The world's largest automaker announced suspensions in operations at multiple Japanese plants next month due to a “parts shortage resulting from the spread of Covid-19 in Southeast Asia".

"We plan to reduce our global production by some 40 per cent in September, from just under 900,000 originally planned," a Toyota spokeswoman told AFP.

The world's largest automaker by sales volumes has fared better than rivals, having built a larger stockpile of chips under a business continuity plan adopted after the 2011 earthquake and the Fukushima nuclear disaster. But a resurgence in Covid-19 cases across Asia has compounded the semiconductor crunch.

A Toyota executive said the September cuts included 14 factories in Japan and overseas plants, and that it was reducing its planned global production that month by around 360,000 vehicles.

Japan's Nikkei daily had recently reported that the global chip shortage was behind Toyota's planned reduction in new vehicles. The Nikkei said Toyota would also scale back production in North America, China and Europe from early September.

Microchips are essential for the electronics systems of modern cars, and have been in short supply since the end of last year.

When the pandemic hit, carmakers scaled back orders and chipmakers shifted output to consumer electronics as people splurged on equipment to work and relax at home -- leaving automakers in a tight situation as demand for vehicles picked up.

The chip crunch and other virus-related supply chain issues had already caused several short suspensions at Toyota's Japanese factories. The carmaker had already halted assembly lines at some Japanese factories between late July and early August, including its Tahara plant, due to a surge in infections in Vietnam which had constrained the supply of parts, the Nikkei reported earlier.

Toyota had also suspended production at one assembly line in Guangzhou, China, which it operates with its Chinese joint-venture partner Guangzhou Automobile Group Co Ltd. In Thailand too, Toyota suspended production last month at three factories due to a pandemic-related parts shortage.

The company reported a record first-quarter net profit earlier this month, with strong sales fuelled by the recovery from the coronavirus crisis.

Toyota shares plunged 4.42 per cent to 9,295 yen on Thursday, their biggest daily drop since December 2018 that pulled the benchmark Nikkei average to a seven-month low.

(With agencies' input)

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