Home South Africa News UPDATE 2-Toyota cuts production target by 3% on parts and chips shortages

UPDATE 2-Toyota cuts production target by 3% on parts and chips shortages

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TOKYO, Sept 10 (Reuters) – Toyota Motor Corp cut

its annual production target by 300,000 vehicles on Friday as

rising COVID-19 infections slowed output at parts factories in

Vietnam and Malaysia, compounding a global shortage of auto

chips.

“It’s a combination of the coronavirus and semiconductors,
but at the moment it is the coronavirus that is having the
overwhelming impact,” Kazunari Kumakura, an executive at the
world’s biggest car maker, said after the company revised its
production target.

Unlike other big global automakers that were forced earlier
to scale back production plans, Toyota had managed to avoid cuts
to output because it had stockpiled key components along a
supply chain hardened against disruption following northeast
Japan’s devastating earthquake in 2011.

The Japanese carmakers’ announcement on Friday is a further
sign that no part of the global car industry has escaped the
affects of a pandemic that has sapped sales and is hobbling the
their ability to take advantage of the recovery in demand that
followed the initial waves of COVID-19.

Car sales in China in August fell by almost a fifth from a
year earlier because there were fewer vehicles for people to
buy.

Toyota now expects to build 9 million vehicles in the year
to March 31, rather than 9.3 million. It did not revise its 2.5
trillion yen ($22.7 billion) operating profit forecast for the
business year.

Adding to a 360,000 vehicle cut in worldwide production in
September, Toyota said on Friday it will reduce output by a
further 70,000 this month and by 330,000 in October. It hopes to
to make up some of that lost production before its year-end.

Demand for chips has soared during the pandemic as consumer
electronic companies rush to meet stay-at-home demand for their
smartphones, tablets and other devices.

A heavy reliance on Southeast Asian factories for parts is a
headache for Toyota, but its also a problem for its rivals that
have struggled with what Volkswagen AG has described
as “very volatile and tight” chip supplies.

The German carmaker has warned it may need to cut production
further as a result. Ford Motor Co last month shut down
production at a plant in Kansas that builds its best-selling
F-150 pick up because of parts supply woes, with France Renault
SA extending partial stoppages at factories in Spain.

German luxury carmaker Daimler this month said it
expects chip shortages to significantly lower third quarter
sales.
($1 = 109.9200 yen)
(Reporting by Tim Kelly; Editing by Muralikumar Anantharaman
and Kim Coghill)