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Toyota to reduce production in Japan and North America due to chip shortage

Toyota to reduce production in Japan and North America due to chip shortage


It’s the latest automaker to feel the effects of the shortage

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COVID-19’s Impacts The Automotive Industry
Toyota’s supply chain has been disrupted
Photo by Artur Widak/NurPhoto via Getty Images

Toyota said Thursday that it would reduce production in Japan and North America due to a shortage of semiconductor chips, a sign that even the best-run supply chains are being affected by the shortage.

In Japan, the automaker will reduce production by 40 percent later this month and into September, which will affect most of its production lines, the The Wall Street Journal reported; planned reductions in North America will be between 40 and 60 percent in August. The reductions mean Toyota will produce between 60,000 and 90,000 fewer vehicles.

“Due to COVID-19 and unexpected events with our supply chain, Toyota is experiencing additional shortages that will affect production at most of our North American plants,” the company said in a statement. “While the situation remains fluid and complex, our manufacturing and supply chain teams have worked diligently to develop countermeasures to minimize the impact on production.” The company does not expect the disruptions in production to affect staffing levels.

“We sincerely apologize for the inconvenience caused to our customers and suppliers,” the company said.

Toyota is the latest automaker to alter its production plans because of the semiconductor shortage caused by COVID-19 related slowdowns at chipmakers’ plants. Volkswagen also said Thursday it may have to cut production because of the chip shortage, and both Ford and General Motors said in the spring that they were idling or extending shutdowns at several of their North America plants. Tesla, meanwhile, said in July that it was rewriting its vehicles’ software to support alternative chips. But Tesla CEO Elon Musk said during an earnings call that “the global chip shortage situation remains quite serious.”

Toyota had been mostly shielded from the chip shortage up to this point; as the WSJ noted in May, Toyota made adjustments to its famously efficient supply chain to try to adapt. But with the delta variant of the coronavirus leading to an increase in infections globally, chip production will likely remain slow.