Toyota to reduce Japan auto production by 40% in September amid chip shortage

Author: Adam Yanelli


HOUSTON (ICIS)--Toyota will reduce September production in Japan by about 40% amid a parts shortage – including microchips – compounded by rising coronavirus cases in southeast Asia, the global automaker said on Thursday.

In a release posted to the company’s website, Toyota said the production adjustments are in addition to previously announced changes to its production schedules.

The company did not immediately respond to questions about adjustments to US production.

The global auto industry has been hit particularly hard amid strained supply chains as the reopening of economies following COVID-19 lockdown measures created a surge in demand.

The winter storm in February, the slowdown of coronavirus vaccinations and the emergence and rapid spread of the Delta variant compounded the situation.

North American automakers have also been forced to make production adjustments amid the shortage.

Microchips are used to control the engine, antilock brakes, power steering, fuel-monitoring system and heating and air conditioning in modern vehicles and are vital to production.

US July sales of new light vehicles fell from June, marking the third straight month of decreases.

But executives from US automakers Ford and GM said during second-quarter earnings calls that they anticipate the chip shortage to ease and expect to see a surge in production in the second half of the year.

The auto industry is a major end-market for petrochemicals and contributes about a third of the raw material costs of an average vehicle.

The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethanes and methyl methacrylate (MMA)/polymethyl methacrylate (PMMA).

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