Chip shortage: Toyota to cut global car production by 40%

Toyota will reduce its vehicle production 40%. The change will affect 14 auto assembly plants in Japan, as the coronavirus pandemic in Southeast Asia cuts parts supply.

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Toyota is cutting production in August and September due to a chip shortage that has hit the entire industry for several months now, as well as an increase in COVID-19 cases in the region. The automaker will suspend production at all of its 14 Japanese assembly plants for varying durations until next month.

The maker of the Prius Hybrid, which recently saw a recall campaign of 750,000 vehicles due to a software glitch, had planned to build just under 900,000 automobiles for the month, but that figure has been reduced to around 500,000 vehicles. Indeed, the Japanese company said that it would reduce its global production in September by around 360,000 vehicles, including 140,000 in its Japanese factories and the rest in foreign factories (40,000 in Europe)

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Toyota in turn hit by component shortage

The world’s largest automaker in terms of sales volumes has fared better than its rivals in the face of the global component shortage. Indeed, the Japanese manufacturer had built up a larger stock of chips as part of a business continuity plan adopted after the 2011 earthquake and the Fukushima nuclear disaster.

After having used up its reserves of chips, Toyota is in turn hit by the shortage, because of the upsurge in COVID-19 cases in Asia which has exacerbated the supply difficulties. This situation may not get better in the short term, as Nvidia, Intel and TSMC believe the chip shortage will continue until 2023.

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Despite the crisis, Toyota said it was maintaining its production plan aimed at build 9.3 million vehicles worldwide in the current fiscal year ending March 31, 2022. Toyota has so far weathered the pandemic relatively well, recording record profit for the April-June quarter of around $ 8 billion, more than five times more than for the same period of the previous year.

Source: BBC

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