Toyota announced the suspension of production on many of its major Japanese production lines for certain days in November, attributing the latest round of down time to the global semiconductor chip shortage.
The company issued a statement beginning with an apology for the, “considerable inconvenience to our customers, who have been waiting for the delivery of vehicles, suppliers and other parties concerned.”
The statement went on to detail the planned production volume for November as approximately 800,000 units, with about 250,000 vehicles to be made in Japan and 550,000 vehicles in the U.S. and elsewhere. Toyota is reducing its full-year production forecast for FY2023 to less than the originally planned 9.7 million units, though the automaker did not issue a new forecast.
Here we go again
This follows a pattern of reduced production estimates each month, followed by revisions of production plans that further reduce production for the month. Heavy rainfalls in Japan earlier this summer were also factored into certain plant suspensions.
On Aug. 10, Toyota estimated that its September production would total 850,000 units worldwide, but that the company would average 900,000 units per month from September to November. But on Sept. 22, the October production plan reduced that estimate to 800,000 based on semiconductor shortages. Just one week later, an adjustment reduced the October goal to 750,000 vehicles.
Production lines being idled span the entire range of Toyota, Lexus, and Hino vehicles. Popular Toyota vehicles with production limitations include the RAV4 and RAV4 Prime, GR Yaris, Prius, Corolla, Camry, Crown, Land Cruiser and 4Runner. Affected Lexus products include the ES, RX, NX, IS, RC and GX.
“It remains difficult to look ahead due to semiconductor shortages, the spread of COVID-19, and other factors,” Toyota said in statement. “We will continue to make every effort to deliver as many vehicles as possible to our customers at the earliest date while closely examining the situation.”
Industry-wide shortage
The semiconductor supply shortage is hardly limited to Toyota. Last month Reuters reported that Honda was idling up to 40% of its Japanese production capacity due to supply chain limitations. U.S. manufacturers are reported to have reduced production by over 1 million units, with a similar number cut by European manufacturers. Still, this is an improvement compared with 2021, when more than 11 million vehicles were canceled for lack of semiconductor chips.
Why a chip shortage?
The roots of the chip shortage, like so many inconveniences this year, can be traced back to the COVID pandemic. Among other things, the social changes wrought by attempts to stop the spread of COVID led to increased demand for consumer electronics and reduced workforce to produce the semiconductors.
At the same time, automakers idled production and canceled their semiconductor orders at the outset of the pandemic, and then were surprised with the speed at which the economy rebounded. Companies then had to compete for new semiconductor orders, and production has yet to catch up to demand.
The shortage has cost the industry at least $210 billion in lost revenue, and has led to wild fluctuations in dealer pricing as consumers compete for a smaller pool of available new vehicles.
This summer, the U.S. government took steps to ameliorate the shortage in the longer term by passing the CHIPS Act, which provides more than $50 billion to support the domestic semiconductor industry. The act provides $39 billion to fund, build, expand or modernize domestic facilities and equipment for semiconductor fabrication; $12.5 billion for research and development to promote American leadership in advanced semiconductors and 5G communication; $2.7 billion for boosting supply chains and the semiconductor work force and a 25% investment in semiconductor manufacturing.
However, these improvements in capacity will take years to build out and begin production. In the interim, the chip shortage will continue to affect global vehicle production at least through 2023.
