As the pandemic hits the supply chain, Toyota cuts its annual production target


Toyota Motor Corporation Update

Due to the return of Covid-19 cases in Asia and the deepening of the semiconductor crisis, Toyota lowered its production forecast for this year.

The world’s largest automaker warned that as chip shortages in Southeast Asia worsened, supply disruptions and forced factories to close, they need to cut annual production by 3%.

Less than a month after the Japanese company said It is cutting Due to supply chain issues, global production this month was reduced by 40%.

Toyota has closed factories around the world because parts cannot reach its factories, while Peugeot in Europe and Ford and General Motors in the United States have reduced their shifts due to semiconductor supply restrictions.

The Japanese group said it will reduce production of 70,000 vehicles and 330,000 vehicles in September and October, respectively.

It expects to produce 9 million vehicles by the end of the fiscal year in March, instead of the 9.3 million previously predicted. In August, it said it would reduce production by 360,000 vehicles in September.

“Although our factories and suppliers are adopting thorough quarantine and vaccination measures to deal with the pandemic in Southeast Asia, the spread of Covid-19 infection is still unpredictable and it is difficult to maintain operations due to local lockdowns,” the company said in a statement. The statement said.

Natural disasters and the coronavirus have exacerbated supply constraints, with a large portion of semiconductors being manufactured in Asia.

Analysts said that the production cuts stemmed from the suspension of work in Malaysia’s factories producing brake system chips and Vietnam’s factories producing automotive wiring harness semiconductors.

Toyota said that since the warning issued earlier in August, another component supplier in Malaysia has reported a new cluster of Covid cases.

Toyota’s head of global procurement, Kazunari Kumakura, said that although the company is scrambling to find alternative auto parts, it has become increasingly difficult to fill the supply gap.

It is only in recent months that Japanese automakers, especially Toyota, have gotten rid of their worst shortages due to their huge chip inventories and supply chain management skills honed in past natural disasters.

But even their supply chain is facing severe pressure from insufficient inventory levels.

Jefferies analyst Takaki Nakanishi said: “Although the Malaysian semi-chip factory has resumed operations, the utilization rate and delivery time did not lead to the rapid recovery envisaged on August 19, which is the reason for the additional production cuts.”

The brokerage estimated that the turbulence related to the pandemic will be resolved in October, and the global chip shortage will ease next year.

in a Recent interview In an interview with the Financial Times, Hidetoshi Shibata, CEO of Japanese chip manufacturer Renesas Electronics, said that there are signs that some automakers are beginning to “double and triple reservations” for next year to increase inventory levels, which will cause more changes. Large gap between supply and demand.

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