The global semiconductor shortage has finally started to bite at Toyota TM -4.09% Motor Corp., highlighting how a resurgence in Covid-19 infections from the Delta variant is now stifling chip manufacturing in Southeast Asia, worsening parts crisis for car companies. Japan’s largest carmaker said Thursday it was cutting production in the country by 40% in September because of a shortage of semiconductors, highlighting how the scarcity is hitting even the best-prepared companies.
Ford Motor Co. and General Motors Co. also said this week they are scheduling more downtime at several North American factories, in part because virus-related restrictions overseas are further adding to chip-supply constraints.
For much of this year, the chip-shortage challenges in the auto industry have largely stemmed from car companies miscalculating how quickly auto sales would bounce back and not ordering enough semiconductors.
Now, the auto industry is confronting a new wrinkle with a resurgence in Covid-19 infections in Southeast Asia, particularly in Malaysia, denting output at computer-chip factories that are already straining to fill orders. This region is where semiconductors are assembled into small components that control everything from engines to headlights.
Toyota’s cuts mostly affect plants in Japan and some of its bestselling vehicles. One of Toyota’s main plants near its headquarters in Toyota City, which produces the RAV4 sport-utility vehicle and Corolla sedan, will close from Sept. 1 to 17. The nearby Tsutsumi plant that produces the Camry and Lexus ES sedans faces a similar period of closure.
In North America, the Japanese automaker plans to reduce factory output by between 40% and 60% in August, a spokesman said.
The cut will leave Toyota with 60,000 to 90,000 fewer vehicles rolling off the assembly line during this time, affecting a range of models. It also expects manufacturing disruptions to cost it another 80,000 vehicles in lost North American output in September, although its estimates remain fluid.
Toyota doesn’t expect the reduction to affect employment at this time, the spokesman said.
“We sincerely apologize for the inconvenience caused to our customers and suppliers,” Toyota said.
Malaysia implemented a countrywide lockdown in June and closed most factories, in an attempt to stem an outbreak of the highly infectious Delta variant.
Those measures have failed thus far, and the prime minister resigned this week amid criticism of the lockdown.
Toyota officials said Aug. 4 that production wasn’t improving and the shortage of semiconductors was a nagging problem. They cited lengthy factory closures in Malaysia and Thailand as a particular issue.
Toyota shares fell 3.5% shortly before markets closed in Tokyo as investors reacted to a report about the cuts in the Nikkei newspaper.The Japanese carmaker had touted its ability to insulate itself from the global shortages that burned its peers’ thanks to stockpiles of components and close relationships with suppliers.