Toyota to cut down September output by 40% amidst severe chip shortage

Toyota to cut down September output by 40% amidst severe chip shortage

by Pranali Mehta

Toyota Motor Corp. will reportedly slash its global production for the month of September by 40%, becoming the last prominent automotive company to reduce output owing to severe shortages of semiconductors.              

Notably, Toyota is the world's largest automaker by sales volumes and has performed better than its industry rivals during the COVID-19 pandemic. The company had previously created a large stockpile of chips in a business continuity plan implemented after the 2011 Fukushima nuclear disaster and earthquake.

However, a resurgence of coronavirus infections across the Asian subcontinent has exacerbated the global chip crunch, compelling the car manufacturer to cut back on its previously planned output volumes.

A Toyota representative was quoted saying that the company intended to reduce global production in September by around 3,60,000 units, and cuts would be implemented in 14 factories located in Japan and overseas plants.

Meanwhile, Toyota share prices plunged by 4.4%, recording the largest daily drop since December 2018 and dragged the Nikkei index average to a seven-month low.

The company revealed that it has been working in a volatile business environment caused by surging COVID-19 cases in developing economies, inflating material costs and severe chip shortages.

Last month, the automaker suspended production at three factories in Thailand due to a pandemic-instigated parts shortage. This was followed by a cessation of assembly lines at certain factories in Japan between late July and early August, due to rapidly spreading infections in Vietnam which blocked the supply of materials.

If reports are to be believed, Toyota also halted production at an assembly line in China, which it operates jointly with Guangzhou Automobile Group Co. Ltd.

Starting early next month, the company will temporarily stop production lines at its domestic units including the Takaoka plant based in Aichi Prefecture. Meanwhile, manufacturing in China, North America, and Europe are also likely be phased down by tens of thousands of units.

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Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...