Chip shortage still biting

Toyota among manufacturers to scale down car production as semi-conductor crisis continues.

Despite optimistic forecasts that have projected a substantial recovery in terms of global microchip inventory in the second half of 2022, it’s becoming more obvious such a scenario is unlikely to materialise.

It means the crisis will likely continue to be a major issue for all carmakers despite their efforts to secure the short-term supply they require.

For example, Toyota says its attempts to reduce disruption caused by the semi-conductor shortage paid off in August when it recorded a significant bump in terms of sales and production when compared to the same month of last year.

However, this doesn’t necessarily mean the crisis is over and the company can return to pre-2020 production levels.

Indeed, Toyota recently confirmed its struggle to source chips continues. It has apologised for long waiting times that consumers have no other option than to accept when they buy new vehicles, the cause being the health crisis and shortage of parts.

It adds there is no other option other than again revising production meaning that fewer cars will be rolling off its assembly lines in October than originally anticipated.

Toyota planned to build a total of 800,000 vehicles globally this month, but is now making additional adjustments to its domestic operations, so the number will drop by 50,000 units.

It's temporarily shutting production on five lines in five plants in Japan – out of 28 lines and 14 plants. The suspensions are taking place at the Tsutsumi, Tahara, Miyata, Inabe and Hamura plants. Production of several models could be affected, such as RAV4, Prius, Corolla, Corolla Sport, Camry, Land Cruiser Prado, Lexus GX, 4Runner, Lexus LS, IS, RC, RC F and NX, as well as the Toyota FJ Cruiser.

The Japanese carmaker, however, is confident its production forecast for the fiscal year can still be reached. It wants to build 9.7 million units so, most likely, it’s hoping production can be accelerated further down the track to recover from the downtime caused by the current lack of semi-conductors.

However, this implies a substantial recovery in terms of chip supply and, at this point, opinions are still divided over whether this is possible or not.

Mary Barra, General Motors’ chief executive officer, for instance, doesn’t believe the chip nightmare can be resolved this year. In September, she said the crisis is very likely to continue in 2023 “and beyond.”

And more industry experts seem to believe constrained inventory could remain a problem even after next year. Intel, reports Auto Evolution, previously forecasted that the chip shortage would be resolved earlier than 2024, adding other global problems and lack of various materials will further fuel the crisis and lead to similar short-term production struggles.

Predicting pre-2020 production levels will be restored is basically impossible right now. That’s especially the case as foundries may encounter further challenges, including the lack of materials and equipment for making chips.