Toyota cuts production by 40% due to chip shortage

19 August 2021

Volkswagen has become the latest car manufacturer to announce it may have to cut car production due to “volatile” supplies of semiconductor chips. 

VW told Supply Management “a significant shortage” of vital semiconductor chips meant car production may need to be reduced and “further adjustments to production cannot be ruled out”. 

New outbreaks of Covid in Malaysia and Taiwan have led to renewed shutdowns of key semiconductor factories and supplies of the chips remained “very volatile and strained”.

A VW spokesperson said: “In recent months the Volkswagen Group’s task force has been working intensely and successfully to minimise the effects of the global semiconductor bottleneck on products in the group.”

VW said it hoped to see improvements in semiconductor supplies by the second half of this year, and it was planning to mitigate a backlog of orders by adding extra production shifts.

Meanwhile Toyota has announced it plans to cut global production by up to 360,000 vehicles – 40% – in September. The cuts are mainly taking place in 15 factories in Japan and across Europe.

The carmaker already halted production at some of its Japanese factories in July and August after a rise in coronavirus infections in Vietnam led to shortages. 

Toyota had previously managed to mitigate the impact of the chip shortage because it stockpiled semiconductors following the Fukushima nuclear disaster in 2011. 

A Toyota spokesperson told Supply Management: “Toyota is going to great lengths to minimise the impact of the semiconductor supply shortage that is globally impacting the automotive industry.”

They explained while production in the UK is not being affected, European production, especially in France, Denmark and Turkey, is being impacted.

“Toyota Motor Europe is working diligently with its supplier network to limit further impact on production and is making every effort to deliver vehicles to our customers as quickly as possible.

“We will strive to recover the lost volume and to maintain its European sales plan for 2021.”

The global car manufacturing industry has been severely hit by global shortages of semiconductor chips, which are also essential for the production of computers and gaming devices. 

The Society of Motor Manufacturers and Traders (SMMT) announced UK car production in June reached its lowest levels since June 1953 – with the acception of last year at the peak of the pandemic – with just 69,097 cars produced.

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