Chip Shortage Demolishes Toyota Vehicle Production, Pandemic Blamed


Despite being one of the only manufacturers not to incur heavy production losses over the global semiconductor shortage, Toyota has announced that its luck has finally run out. The automaker is estimating that it will need to cut assembly by 40 percent this September.

It’s not alone. Both Ford and General Motors have announced they’re also stifling production this week to account for a deficit of chips. Even Volkswagen Group has been cautioning that it might schedule more downtime going into the fall. But that’s basically been the story for all of 2021. Toyota just happens to be the newest inductee. 

According to Nikkei Asia, Big T had originally planned on moving 900,000 units in September but has scaled estimates back. Part of that is due to the high global demand for semiconductors, as we’ve somehow convinced ourselves that every consumer product needs to offer Bluetooth connectivity or some other digital goodie that adds nothing to its core function. Another issue is just how absolutely busted we’ve allowed supply chains to become after COVID lockdowns stalled facilities around the planet for months. But Toyota seems to be suggesting it’s the new Delta variant that’s mucking things up at present.

“The chip shortage is also a problem, but the big impact is from the coronavirus in Vietnam and Malaysia,” a spokesperson told the outlet.

From Nikkei:

At roughly 500,000 units, Toyota’s global production in September will be the lowest since May 2020, when the coronavirus was hitting U.S. and European factories.

Other automakers also feel the impact of the Southeast Asian lockdowns disrupting supplier production schedules.

Honda Motor cut vehicle output in the Chinese city of Guangzhou this month by 20,000 autos, or 20 [percent] of its production plan as of the end of July.

Nissan Motor has shut its plant in the U.S. state of Tennessee for two weeks owing to the impact on procurement of chips from Malaysia. Volkswagen, General Motors and other global automakers also have been forced to curtail production since late last year, mainly as a result of the semiconductor shortage.

Toyota from late July to early August halted assembly lines at some factories in Japan.

This is going to sound crass but the pandemic has been an extremely convenient excuse for bad decision-making for a while now. If something’s not going the way you want you can just attribute any mistakes made to COVID and absolve yourself of any responsibility. That’s not to suggest that the Delta variant isn’t on the march, just that it’s become the go-to excuse for any industry achieving less-than-desirable results.

Toyota even has a running tally of every single employee that’s tested positive that it shares with the media. These catalogs are just lists of locations, ages, and job descriptions followed by when they tested positive and last worked. The impact on production is always cited as “none” and begs the question as to the utility of keeping such close tabs in the first place.

However, the claim that parts of the Pacific are shutting down is true. Despite having fewer than 1,000 virus-related deaths overall, Australia has instituted extremely severe lockdown protocols many have argued border on human rights abuses. New Zealand shut down the entire country over a single COVID case. Thailand, South Korea, and Vietnam announced harsh new travel restrictions in July. China has also been introducing rolling lockdowns in any region authorities have cited an outbreak. This has hampered supply chains across Asia, encouraging global bottlenecks and production shutdowns extending well beyond the purview of semiconductor chips.

But it’s much easier to blame the high-profile absence of semiconductors than address the bigger issue that international supply chains are absolutely broken right now.

Based on how 2021 has progressed, it’s difficult to see a future where supply issues aren’t the norm. Automakers are still announcing profits (Toyota posted record quarterly earnings at the start of the month) while issuing warnings about parts shortages and downtime. Meanwhile, dealers are able to throw a meaty premium on vehicles due to leaner inventories, and governments the world over are enjoying more unchecked power than they’ve ever had before. It seems like the only person who isn’t getting a sweet deal out of this is you, and why would anyone care what you think?

[Image: Toyota Motor Corp.]

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