TOYOTA SHORTAGE AHEAD
Microchip shortage reduces global productionFriday, September 24, 2021
BY BALFORD HENRY
TOYOTA Jamaica is bracing for a bumpy ride after the world's largest carmaker announced it was cutting production by 40 per cent due to a severe global shortage of microchips.
“It's going to have an effect on our supply of vehicles for sure,” Tom Connor, managing director of Toyota Jamaica, told the Jamaica Observer's Auto magazine yesterday.
“It's evolving all the time. Two months ago we were told it is going to have an effect but it didn't look too bad then, maybe two months of allocations. But, now we are being told that it is going to stretch into most of 2022. Obviously, we are going to try and get as much allocation as we can... I don't think there is an automobile company that is not going to be affected,” he continued.
Toyota Jamaica — with its headquarters on Old Hope Road in St Andrew — is Jamaica's number one auto dealer in terms of sales. Global sales for Toyota in the first half of 2021 were 5.005 million units (up 32.7 per cent compared to 2020 and up 4.5 per cent compared to 2019). This result was driven primarily by sales in North America and China.
According to the BBC, Toyota had planned to make almost 900,000 cars this month, but has now reduced that to 540,000 vehicles.
Volkswagen, the world's second-biggest car producer, has warned it may also be forced to cut output further.
The novel coronavirus pandemic boosted demand for appliances that use chips, such as phones, TVs and games consoles.
Other rivals, including General Motors, Ford, Nissan, Daimler, BMW, and Renault, have already scaled back production in the face of the global chip shortage.
A wide range of businesses including carmakers and small appliance manufacturers have been hit by the chip shortage. The problem emerged last year, when Apple had to stagger the release of its iPhones, while the latest Xbox and PlayStation consoles failed to meet demand.
Recently, the head of chipmaker Intel, Pat Gelsinger, said the worst of the global chip crisis was yet to come. He predicted that the shortage would get worse in the “second half of this year” and it would be “a year or two” before supplies returned to normal.
The shortage prompted US President Joe Biden to sign an executive order to address the issue. He vowed to seek US$37 billion in funding for legislation to increase chip manufacturing in the United States.
According to Connor, to compound the situation, there were five major microchip producers until a massive fire put out one company last year, reducing the capability of the companies to produce enough microchips which are in a big demand for cell phones; computers, tablets, etcetera.
“Seeing that there are only four major producers left in the world, 25 per cent of the production is lost, while there is an extra demand. It's a rough ride,” Connor told Auto.
According to the BBC, millions of products — cars, washing machines, smartphones and more — rely on computer chips, also known as semiconductors. And right now, there just aren't enough of them to meet industry demand. As a result, many popular products are in short supply.
In the UK, Toyota has a car plant at Burnaston, in Derbyshire, and an engine plant on Deeside. In a statement, it said: “Toyota is going to great lengths to minimise the impact of the semi-conductor supply shortage that is globally impacting the automotive industry.
“In terms of our UK production operations, we are currently operating as planned at both plants.”