Toyota Motor is planning to cut its annual production target by 300,000 vehicles due to rising COVID-19 infections that slowed down output at parts factories in Vietnam and Malaysia, compounding a shortage of auto chips.
“It’s a combination of the coronavirus and semiconductors, but at the moment it is the coronavirus that is having the overwhelming impact,” Kazunari Kumakura, an executive at the world’s biggest car maker, said after the company revised its production target.
Toyota earlier managed to avoid cuts in production because it had stockpiled key components along a supply chain hardened against disruption.
Toyota now expects to build 9 million vehicles in the year to March 31, rather than 9.3 million. It did not revise its 2.5 trillion yen ($22.7 billion) operating profit forecast for the business year.
Adding to a 360,000 vehicle cut in production in September, Toyota will reduce output by a further 70,000 this month and by 330,000 in October. Toyota hopes to make up some of that lost production before its year-end.
A reliance on Southeast Asian factories for parts is a headache for Toyota, but it’s also a problem for its rivals that have struggled with what Volkswagen has described as very volatile and tight chip supplies.
The German carmaker has warned it may need to cut production as a result. Ford Motor last month shut down production at a plant in Kansas that builds its F-150 pick up because of parts supply woes. France Renault SA extended partial stoppages at factories in Spain.
German luxury carmaker Daimler this month said it expects chip shortages to significantly lower third quarter sales.
