Toyota succumbs to chip shortage finally after Delta surge

car assembly two men
The Delta variant in Southeast Asia has put a dent on components production, affecting vehicle output at Toyota, GM and Ford. (Getty Images)

Toyota in February said it had stockpiled components and would be able to withstand global chip shortages hurting other carmakers, but this week told another story.

The carmaker plans to cut production in Japan by 40% in September due to a shortage of chips and will reduce output by 40% to 60% in North America in August.

The reduction in North America means up to 90,000 fewer vehicles will be produced, with another 80,000 reduced in September, Toyota said.

Ford and GM also have said this week there are scheduling more down time at several North American factories partly due to the Covid-19 restrictions overseas, according to reports.

A resurgence of Covid-19 with the Delta variant in Southeast Asia, particularly in Malaysia, is hurting output at chip factories.  Factories in the area also assemble semiconductors into components used in vehicles. Malaysia had a countrywide lockdown in June and closed most factories to try to stem Delta outbreaks. Many criticized the lockdown and the nation’s prime minister resigned over the fallout.

Before the Delta variant surged, chip shortages were mainly due to vehicle manufacturers underestimating how soon car sales would recover a year ago after they had cut orders on chips earlier in 2020 when Covid-19 hit.

Toyota said its main plant in Toyota City where it produces the RAV4 and Corolla sedan will close from Sept. 1 to Sept. 17. The nearby Tsutsumi plans that makes Camry and Lexus ES sedans will also close for that period.  A Toyota spokesman told the Wall Street Journal that doesn’t expect reductions to affect jobs at its plants so far.

Ford plans to cut production at one of two F-150 pickup truck plants next week over the supply problems with the Malaysia outbreak.  Analysts said Ford lost output of 160,000 F-150s due to earlier disruptions.

GM also plans to extend factory shutdowns at several North American plants into September, affecting manufacture of SUVs, including Chevy Travers and Buick Enclave.

Previously CEO Mary Barra said it expects to deal with chip shortages through 2021 and into 2022.  The company expects to make 100,000 fewer vehicles in the second half of the year.