Vehicle manufacturers have been struggling to keep up with their usual production output since 2020 due to supply chain disruptions caused by the Covid pandemic. Two years later, the industry’s biggest players are putting plans in place to ease the pain on their supplier base. Toyota has now announced plans to reduce production at its Japanese plants for a few months amid global supplier difficulties with semiconductor chip and other part shortages.
The global semiconductor chip shortage
Car manufacturers first encountered supply issues with chips in the onset of the pandemic in 2020, when lockdowns, severe weather events and ongoing trade issues between the US and China combined to increase demand and hinder supply.
Toyota scaling down production
To give its supplier base time to recover and return to normal, Toyota has announced it will reduce production at its Japan factories over the coming months. Calling them an ‘intentional cooling off period’ for suppliers, the production cuts will occur on a sliding scale – 20% during April, 10% during May, and 5% during June – before returning to normal production in July.
This is despite recording an incredible year of sales in 2021. Toyota achieved most car sales globally in 2021 with 10.3 million cars – a 10% increase over 2020 and 1.7 million cars ahead of runner up, Volkswagen.
Chip and part shortages aren’t’ the only hiccup Toyota has dealt with this year. In early March, production stopped for a full day when a supplier’s server went offline due to a computer virus.
Looking Ahead
Honda joined Toyota in working to ease strain on its suppliers in March by slowing production by 10% throughout the month.
While slowing down production will help, supply chains are now further disrupted by the Russia-Ukraine conflict. For example, Volkswagen EV factories have paused production in Germany and various other manufacturers have halted production at their Russia factories.
