Japanese automakers cut production by over 1 million units due to lack of chip supply from Southeast Asia

According to a report by Nikkei Asia, several automakers in Japan have announced plans to reduce production by more than one million vehicles for the current fiscal year. This is due to a rise in Covid-19 infections in Southeast Asia, which has affected the supply of semiconductor chips from major suppliers in the region, including for automakers in Europe and the United States.

On September 10, Toyota said it would revise its global production forecast to nine million units instead of 9.3 million units previously. In the short term, this will see the number of vehicles produced decrease by around 70,000 units and 330,000 units (180,000 units overseas and 150,000 units in Japan) for October, compared to the production plan as of August.

Toyota adds current demand remains very strong, but the production outlook for November and beyond remains unclear. As a result, it says that the production plan for November and the months after assumes that the previous plan will be maintained.

Suzuki has been affected quite significantly by the chip shortage, as it is reducing production by 350,000 vehicles, which is 10% of the total produced during its last fiscal year. The company’s operations in countries like Japan, Thailand and Hungary will be suspended as a result, while India, one of its largest markets, is expected to operate at only about 40% of normal capacity this month.

Meanwhile, Nissan has already said it will lower production by 250,000 vehicles, Honda expects sales to dip by 150,000 vehicles as a result of production cuts on its end, while Mazda, Mitsubishi and Subaru have announced their own production cuts, contributing to a total drop across Japanese automakers of around 1.05 million vehicles.

Toyota says its production cutback is due to the shutdown of a STMicroelectronics plant in Malaysia, which significantly reduced the supply of vehicle parts using semiconductors. With factories not operating as quickly as expected, STMicroelectronics said it has an 18-month backlog of orders and is struggling to keep up with the demand.

Another producer of automotive chips, Infineon Technologies, suspended production at its Melaka plant for a total of 20 days during a lockdown imposed in June. Other companies like Germany’s Bosch and Continental also have factories across Southeast Asia as well.

The semiconductor chip shortage issue has also affected automakers outside of Japan, as General Motors has suspended operations at half of its plants for one to four weeks starting September 6. Renault also shut down some plants in Spain for up to 60 days since end-August, while Volkswagen further reduced production at its primary Wolfsburg plant.

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