Toyota to cut global production by 40 per cent over chip shortage
September output slashed as chip shortage worsens and COVID flares up in key marketsToyota will produce 360,000 fewer cars in September as it slashes production in response to the global semi-conductor shortage that's wreaking havoc on the car industry worldwide.
This equates to 40 per cent of its global production next month, however the Japanese car-making giant claims it is still on track to maintain its annual sales and production targets for the 2021/22 financial year.
According to reports, Toyota has weathered the chip shortage storm far better than its rivals this year, thanks to its decision to stockpile parts, like chips, following the 2011 earthquake and tsunamic, and the related Fukushima nuclear disaster.
In a statement to the financial markets on Thursday, Toyota reiterated its plan to build 9.3 million cars in the Japanese fiscal year ending March 31, 2022.
The company also says it plans to sell 8.7 million vehicles over the same period, which should ensure it remains the world's largest car-maker by volume.
As part of next month's cuts, Toyota said 14 factories both in Japan and overseas would be temporarily closed to ensure the company produces around 360,000 fewer vehicles.
The country most hit by the production cuts will be Japan, which will produce 140,000 fewer cars next month.
Compounding the current chip crisis in its home market is a resurgence of COVID-19 that has led to strict localised lockdowns.
It's not just Toyota that has announced chip-related production cutbacks. On the same day as the Toyota announcement, the Volkswagen Group said it too might have to cut back the number of cars it plans to make in the coming months, with supply of microchips said to be "very volatile and tight" for the third quarter.
A lack of semi-conductors in the US has also seen Ford temporarily close its best-selling Ford F-150 pick-up plant in Kansas City after its supply of chips from Malaysia dried up over COVID-related issues.
Despite declaring it was still on track to meet sales and production numbers, Toyota shares slumped by 4.4 per cent with the news – the car-maker's biggest drop since December 2018.
Related reading: Why the global chip shortage matters to you
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