Toyota and Volkswagen to cuts output amid computer chip crunch


Toyota said it will slash global production for September by 40% from its previous plan, becoming the last major automaker to cut output due to a global chip crunch, but it maintained its annual sales and production targets.

Germany's Volkswagen said it may also need to cut production further and that it expected the supply of chips in the third quarter to be "very volatile and tight."

Toyota's success in navigating the chip shortage better than rivals has come down to its larger stockpile of chips under a business continuity plan adopted after the 2011 earthquake and the Fukushima nuclear disaster.

The world's largest automaker by sales volumes reiterated last week its global production target of 9.3 million vehicles for the year ending in March, as well as its plan to sell 8.7 million cars in the period. "The 9.3 million global production plan takes into account certain risks," executive Kazunari Kumakura told reporters. "We want to achieve the numbers."

Toyota said the September cuts included 14 factories in Japan and overseas plants, and that the company would reduce its planned global production that month by around 360,000 vehicles. Of these, 140,000 will be at Japanese plants, with the rest in the United States, China, Europe and other Asian countries.

Carmakers worldwide have been cutting production due to the months-long chip shortage, but a resurgence in Covid-19 cases in Japan, Philippines, Thailand, Vietnam and Malaysia - home to auto factories and chip plants - have led to stricter curbs and compounded the crisis.

Volkswagen said it expects the situation to improve by the end of the year and aims to make up for production shortfalls in the second half as far as possible. "We currently expect supply of chips in the third quarter to be very volatile and tight," the company said. "We can't rule out further changes to production."

Ford said last week it will temporarily shut its Kansas City assembly plant that builds its best-selling F-150 pickup truck due to a semiconductor-related part shortage as a result of rising cases in Malaysia.

Earlier this month, Toyota had flagged an unpredictable business environment due to fresh Covid-19 cases in emerging economies, the semiconductor shortage and soaring material prices.