Due to the current shortage of semiconductors, Toyota has been forced to cut its global production by 40%. The world's largest carmaker is expected to reduce its monthly production to 500,000 units (earlier it was 900,000 units) in September 2021.
Due to the global shortage of microchips, Toyota has confirmed that it will cut down its new car production globally by 40%. As part of this process, 14 of Toyota’s Japanese production units will cease operation on certain days in September. Toyota was earlier aiming at manufacturing 900,000 vehicles in September, but the company has now reportedly reduced the target to 500,000 units.
Toyota’s decision to cut production at its plants comes in the wake of the ongoing COVID-19 pandemic, as it has caused a global microchip shortage across different industries, including electronics, smartphones, and automobiles.
Unlike a lot of other carmakers, Toyota managed the situation relatively well initially, for the company had stockpiled microchips in large numbers. This is a business practice called the Business Continuity Plan (BCP), which Toyota had adopted after the 2011 earthquake and Fukushima nuclear disaster. It requires the company’s suppliers to maintain a 6 – 8 months inventory. However, the company is now facing a supply crunch.
Since Toyota is slowing down its global production, it’s obvious that the company will also cut production at its other major plants in China, North America, and Europe. There’s no news yet if production in India will be affected due to the global shortage of semiconductors, but the waiting time on some of Toyota India’s products, especially the Fortuner, has reportedly increased by a couple of months due to this very issue.