Toyota to Cut Production by up to 60 Percent Due to Parts Shortage

Toyota workers inspect the new Lexus ES vehicles at a Toyota plant in Miyawaka, Japan, July 6, 2012. Yoko Kubota/Japan--Tags: Transport Business/File Photo/Reuters

A pandemic-driven parts crunch is forcing Toyota to cut production by 40 percent in assembly plants in Japan and by as much as 60 percent in North America.

Japan’s top automaker said in an Aug. 19 factory operation notice that it would be slashing production by around 40 percent across 14 plants in Japan, while a company representative told The Epoch Times in an emailed statement that it plans cuts of between 40 and 60 percent at most of its North American plants.

In both cases, the company blamed the spread of the CCP (Chinese Communist Party) virus for disrupting parts supplies.

“Due to COVID-19 and unexpected events with our supply chain, Toyota is experiencing additional shortages that will affect production at most of our North American plants,“ the representative told The Epoch Times. ”While the situation remains fluid and complex, our manufacturing and supply chain teams have worked diligently to develop countermeasures to minimize the impact on production.”

In North America, Toyota is projecting a reduction of around 60,000 to 90,000 vehicles in August, as well as a reduction of 80,000 vehicles in September, the representative said, noting that the numbers could change, as “the situation remains very fluid.”

“We do not anticipate any impact to employment at this time,” the representative said.

Toyota operates 10 plants in the United States and 14 in North America.

Workers assembling fourth-generation Toyota Prius cars on the production line at the company's Tsutsumi assembly plant in Toyota City, Aichi prefecture, on Dec, 8, 2017. Toshifumi Kitamura/AFP via Getty Images

In Japan, production will halt completely in September at the vast majority of its plants, with a range of models impacted by the cuts, including the Prius hybrid, the Land Cruiser sport utility vehicle, and the Corolla subcompact.

While Toyota declined to specify whether the disruption pertains to components other than those that contain semiconductors, the widely reported global chip shortage has been a major disruptive force in the automaking industry and beyond.

German car manufacturer Volkwagen said on Aug. 19 that the chip supply crunch could force it to slow production in the fall, a move that would add to cuts announced earlier this year.

“We currently expect supply of chips in the third quarter to be very volatile and tight,” a Volkswagen representative told Reuters. “We can’t rule out further changes to production.”

Ford announced on Aug. 18 that it'll temporarily shut its Kansas City assembly plant, which builds its best-selling F-150 pickup truck, due to a semiconductor-related parts shortage, with the one-week shutdown slated to begin on Aug. 23.

Automobiles have become increasingly dependent on semiconductors for everything from safety features such as airbag deployment and emergency braking assistance to computer management of engines for better fuel economy and performance.

While the United States remains the global leader in chip design, roughly 80 percent of semiconductor foundries and assembly and test operations are concentrated in Asia.

The spread of COVID-19, the disease caused by the CCP virus, has disrupted semiconductor manufacturing, with carmakers now facing stiff competition from the sprawling consumer electronics industry for the reduced supply of chips.

Washington has recognized the vulnerability of foreign semiconductor supply chain reliance, with Commerce Secretary Gina Raimondo calling the lack of chip production in the United States a “national security risk.”

President Joe Biden has called for increased investment to revitalize U.S. chip manufacturing, while bipartisan efforts on Capitol Hill have sought to bolster domestic semiconductor supply chains by incentivizing manufacturing in the United States.