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The chip shortage hobbling the auto industry has worsened as a wave of coronavirus cases spreads across south-east Asia, with two of the world’s largest carmakers announcing new disruptions on their assembly lines.
Toyota, the world’s largest carmaker, said it would slash its global production by 40 per cent in September. US-based Ford said one of its plants would halt assembly of its F-150 pick-up truck for a week starting on Monday.
The Japanese group said on Thursday it would build 540,000 vehicles next month, down from the 900,000 it had originally planned.
Almost all of its plants in Japan will be hit, with 27 production lines disrupted. Production will be affected across the company’s global operations, with plants in North America and China each earmarked to deliver 80,000 fewer vehicles than expected. In Europe, output will be down 40,000 against initial plans.
Toyota executives said a sudden surge in coronavirus cases in Vietnam and Malaysia had worsened the semiconductor shortage and also left the group short of other vehicle parts for its global network.
The two countries play critical roles in producing electronics, as well as packaging and testing components, that are used in everything from vehicles to smartphones. Toyota’s biggest manufacturing hub in south-east Asia is in Thailand, which is also wrestling with a record number of Covid cases and production cuts.
“It became difficult to secure the necessary volume for several parts, which led to this sudden and large-scale production cut,” said Kazunari Kumakura, Toyota’s global procurement chief.
At Ford’s F-150 production line in Kansas City, Missouri, the carmaker will drop an overtime shift this weekend and “be down the week of August 23 due to a semiconductor-related part shortage as a result of the Covid-19 pandemic in Malaysia,” Kelli Felker, manufacturing and labour communications manager, told the Financial Times.
Toyota’s cuts are a significant setback for the Japanese company, which had managed to eke out record profits despite the pandemic and the chip shortage, which has hit some rivals much harder.
Shares in Toyota fell 4.4 per cent on the news, which was first reported by Nikkei.
Until now, Toyota had managed to escape the worst of the shortages thanks to its large chip inventory and supply chain management skills honed during past natural disasters.
The carmaker declined to comment on which components faced a shortage. However, it said it had already factored in the production cuts and was sticking to its guidance to produce 9.3m vehicles worldwide in its financial year, which ends in March.
The move by Toyota comes after Chinese carmaker Geely also warned this week of continued “uncertainty” around production because of the chip crisis. Jaguar Land Rover last month halved its sales forecast, blaming a lack of semiconductors.