Toyota Motor Corp. has announced in a statement on 10th September 2021, that its target of producing 9.3 million units (cars) for the year ending March 31st 2022, has now been trimmed down to 9 million (-3.22%) units due to the adverse impact of COVID-19 and global chip shortage.
The automaker further disclosed that the shortage of some parts of production has inspired its decision to revise its production levels within the short to medium term.
“Due to a shortage of certain parts caused by the spread of COVID-19 in Southeast Asia, Toyota is making further adjustments to our production operations for September and reviewing our production plans for October.
“As for September, it is in addition to the adjustment of production operations announced on Aug. 19 (Adjustment to Domestic Production in September). We sincerely apologize to our customers and suppliers for any inconvenience that may be caused by these changes.”Toyota Motor Corp.
Moreover, Toyota disclosed that “additional suspension of domestic operations in September” will include 10 lines of production in 9 plants out of its 28 lines of production in 14 plants.
However, the automaker has revealed that by mid-September, it will announce further production adjustments as it continues to access expected production for October 2021.
Unit production bottlenecks
The Japanese automaker plans on earning about ¥2.5 trillion which is equivalent to US$ 22.7 billion in operational profit for the fiscal year, as reported in the company’s ‘FY2022 First Quarter Financial Result’ summary in August 2021.
Prior to the automaker’s announcement of its cut in production, its share price on 10th September 2021 (7:32 AM ET) rose by 1.53 points to close at US$181.60, representing 0.85% increase. Meanwhile, the previous day’s trading closed at US$180.07.
The automaker’s plans to cut down on production comes in the wake of the global pandemic and acute shortage semiconductor supplies.
“Key reasons for the production adjustment include a decline in operations at several local suppliers due to the prolonged spread of Covid-19 in Southeast Asia and the impact of tighter semiconductor supplies.
“Our plants and suppliers are taking thorough quarantine and vaccination measures in response to the pandemic in Southeast Asia.”Toyota Motor Corp.
Not only has Toyota been hard hit by the adverse impact of the Covid-19 pandemic, but other auto manufacturers have also been impacted as well.
Automakers such as Maruti Suzuki India Ltd., saw its production volume decline to about 40% in August 2021.
Similarly, Suzuki Motor Corp. in Japan plans on trimming its September production by 20%.
Whereas in Europe, Renault SA also plans on halting its assembly plants in Spain for “as long as 61 days before the end on the year”.
In the meantime, the automaker is planning on securing “substitute parts to meet inventory depletion global demand for cars” and plans on diverting its operations to some other regions.
“The spread of COVID-19 infections remains unpredictable, making it difficult to maintain operations due to lockdowns at various locations, and we are working to transfer production to other regions.”Toyota Motor Corp.