The semiconductor chip shortage has wreaked havoc across the auto industry, and even Toyota isn’t immune. Although the automotive giant has fared better than other carmakers, it has made small production cuts nearly every month this year. Due to the rising COVID-19 cases in Asian countries, Toyota had to close some plants altogether.
Despite its best efforts, the manufacturer is struggling. It slashed production on an estimated 360,000 vehicles in September, with around 80,000 intended for the States, Europe Auto News reports. How many cars did Toyota lose this month, and what lies ahead?
Another big loss for Toyota
In May, observers speculated whether the global chip shortage would even affect Toyota of North America. The automaker already had a supply chain management strategy to prepare for inventory shortages. While the shortage took other automakers by surprise, Toyota was prepared to manufacture more cars with alternative materials.
Despite last year’s shutdowns, Toyota was the best-selling automaker worldwide, NBC reports. In 2020, it sold 9.5 million vehicles, most of them RAV4 SUVs and Corolla sedans in the United States. The most popular model worldwide was the Hilux pickup, which isn’t available stateside.
As summer approached, it was clear the automaker’s luck had run out. A resource management strategy can last only so long without replenished materials, and no one knows when the chip shortage will end. Even when semiconductor production resumes normalcy, additional delays will occur as manufacturers work through the backlog. Toyota is also experiencing a lack of wire harnesses, essential for relaying power throughout vehicles.
Plants in Japan began shutting down for days in August, followed by others in Malaysia and Brazil. One plant in Thailand has been closed indefinitely since July. Those shutdowns created shortages of some Lexus models, the Corolla, and Land Cruiser in certain areas. In North America, all but one of Toyota’s 28 factories have suffered because of the cutbacks.
Reuters reports that Toyota lost 65,000 American units in July and expected to lose as many as 90,000 in August. The automaker also needed to cut 70,000 more units last month, bringing September’s loss to 430,000. In total, it slashed its worldwide production output by 40%.
What are Toyota’s plans for October?
Toyota scaled back its output even further this month, planning for a loss of 330,000 units. However, Automotive World reports that Toyota still wants to produce 900,000 units in total by the end of November. At the fiscal year’s end in late March, Toyota wanted to have built 9.3 million vehicles.
The November total was initially a million units to make up for the automaker’s shortcomings in recent months. That wasn’t possible due to the continuing chip shortage. Toyota says it will continue to monitor its situation daily. Production will ramp back up only when it’s safe enough to do so — supplies and no virus outbreaks permitting.
Can the automotive giant bounce back?
As news outlets suggest, 300,000 vehicles here and there is relatively small compared to Toyota’s total global output. In 2019, production at a few Japanese plants peaked at 10.73 million vehicles. The fact that Toyota plans to lose at most 1.5 million units speaks highly of its conservative resource management skills.
However, only time will tell if those skills will last throughout the global chip problem. By the end of the crisis, experts believe automakers will have lost a collective 7.1 million units. It’s possible the shortage could hamper Toyota’s production even more, but it certainly won’t be the only struggling automaker.