Why Toyota Is Forced To Cut Down September Production By 40%

Toyota Motor has decided to review its production targets for September as the crisis has hit its supply chain severely. Therefore, Japanese carmaker Toyota will cut its production by 40% next month due to a global chip shortage, Nikkei daily reported.   

Toyota had earlier announced to manufacture less than 900,00 vehicles in September due to the crisis. However, as the crisis worsens, Toyota has decided to produce around 360,000 units for next month. It caused a drop in Toyota’s shares on August 19 by more than four per cent, its biggest in a day since December 2018.  

Microchips that are essential for the electronic systems of modern cars have fallen short since December last year because of the coronavirus outbreak. With the spread of the more infectious Delta (Indian variant), Toyota is getting more affected.  

“Especially in Southeast Asia, the spread of Covid and lockdowns are impacting our local suppliers,” Kazunari Kumakura, Toyota’s Purchasing Group Chief Officer, was quoted as saying by Bloomberg. “The company will look at ways of further diversifying its supply chains to not focus on one region and is attempting to find replacement parts from suppliers in other regions.”  

Toyota has reached a stage where the auto manufacturer has been forced to suspend operations at several factories, including Japan. It has temporarily shut operations as many as 15 overseas plants in North America, China and Europe.  

The company has to take such a decision just when it reported a first-quarter net profit earlier this month, with strong sales, recovering from the Covid-19 pandemic.  

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