Toyota decides to reduce manufacturing by 40% due to a chip shortage

Due to issues with a computer chip shortage and Covid-19 limitations hurting the manufacture of parts in Southeast Asia, Toyota Motor announced on Friday that it will produce nearly 40% fewer cars and trucks globally in October.

Due to the scarcity and the pandemic, Toyota, the world’s largest carmaker by the number of vehicles sold, will have reduced output for the second consecutive month. The chip scarcity may continue to hinder the auto sector well beyond 2022, according to the most recent indication.

Toyota said that it will now build 330,000 fewer automobiles in October than it had originally anticipated. In October, it’s expected that its North American plants would reduce output by 60,000 to 80,000 automobiles. The business added that global production will fall around 70,000 vehicles shy of already reduced production goals in September. The protracted spread of Covid-19 in Southeast Asia and the resultant impact of constrained semiconductor supply were cited by the carmaker as major factors in the production modification.

“Despite the extensive quarantine and vaccine procedures our facilities and suppliers are taking in response to the Covid-19 epidemic in Southeast Asia, the spread of diseases is still unpredictable, making it challenging to continue operations owing to lockdowns at various sites.”

Toyota has decreased its original forecast of 9.3 million vehicles for the fiscal year that ends on March 31 to nine million vehicles.

Toyota had previously fared better than many other automakers during the chip shortage due to its strong relationships with suppliers and its substantial inventory of parts and components. In the second half of this year, the majority of automakers predicted that the chip scarcity will subside. However, businesses are still being compelled to reduce output and briefly shut down factories.