Is Toyota still having a chip shortage?
Global chip shortage: Toyota profits fall as production hit
The company said that its third quarter operating profit came in at 784.4bn yen (£5bn; $6.8bn).
The world’s best-selling carmaker also cut its annual production target by 500,000 vehicles to 8.5 million.
It comes as manufacturers around the world are struggling to find enough microprocessors for their products.
«We sincerely apologise for the inconvenience caused to our customers due to the series of production volume reductions since last summer. We are working to restore full production as soon as possible,» Toyota said in a statement.
In September, Toyota slashed its worldwide vehicle production by 40% because of the chip shortage.
The company has also announced a number of production suspensions in recent months due to a lack of parts as the pandemic hits supply chains.
Rival carmakers including Volkswagen, General Motors, Ford, Nissan, Daimler, BMW and Renault have also cut vehicle production in recent months.
«The chip shortage will still weigh on Toyota in 2022 but they’ll likely manage any challenges better than their peers,» Tu Le, managing director of Sino Auto Insights told the BBC.
«I think they actually see opportunity in crisis because of their confidence in managing the shortages better than GM and VW. So relatively, I see Toyota having a strong year relative to their competitors,» he added.
Last month, Toyota cemented its position as the world’s biggest car seller as it widened its lead over nearest rival VW.
- Toyota extends Japan car production stoppages
- Toyota to cut production by 40% amid chip crisis
Separately, in January Toyota warned customers in Japan that they would have to wait for up to four years to take delivery of its new Land Cruiser SUV.
The firm said the delay was not related to the global chip shortage or the supply chain crisis.
However, it refused to comment on the reasons behind the long delivery time.
Launched in 1951, the Land Cruiser is Toyota’s longest-selling vehicle, with a total of 10.6 million sold as of August last year.
The pandemic saw a surge in demand for consumer electronics and medical devices, which all contain computer chips.
That meant there weren’t enough semiconductors left for carmakers.
When the global chip shortage first hit the motor industry early last year Toyota was relatively well prepared compared to its rivals.
It had faced a similar issue in the wake of an earthquake and tsunami a decade earlier.
Back then, chip-making factories were damaged, which meant major production disruptions for Toyota and other carmakers.
Toyota reviewed its supply chain and started stockpiling. That meant it had enough semiconductors to last for months.
But as the pandemic dragged on, those stocks are running low and the company now expects to miss its global production target.
And analysts predict the chip shortage could last until next year.
There is some good news though. In recent months, there have been major investments in plants specifically to manufacture chips for the motor industry. Before the pandemic that hadn’t been seen as a priority.
Chipmakers are now battling to win customers in the auto sector after the semiconductor shortage highlighted the size of the market, especially as the growing electric vehicle (EV) industry calls for even more advanced technology.
When it comes to EVs, Toyota is trailing many of its rivals after having long-focussed on hybrids.
While hybrids are still more popular in emerging markets, demand for EVs is growing in the larger economies of the US, China and Europe.
So along with overcoming the chip shortage, Toyota also needs to catch up with its rivals in the EV market if it wants to retain its title as the world’s best-selling car maker.
Toyota exec says car shortage will last another year and shoppers may reject EV push
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Car shopping is not going to get much easier anytime soon, according to an executive at the world’s largest automaker.
Toyota’s executive vice president of sales, Jack Hollis, told the Automotive Press Association on Thursday that he does not expect the supply shortage to ease up until late 2023.
«We’re going to be dealing with this for one more year. I do not believe we’re going to see growing dealer stock for one more year. I think we’re going to be in a situation, speaking for Toyota and Lexus, where whatever we wholesaled is what we’ll retail,» Hollis said, according to Automotive News.
Toyota’s U.S. sales dropped 22% in the second quarter of 2022 due to tight supplies, following several months when it outsold General Motors.
Toyota inventories have reached historic lows. (REUTERS/Aly Song/File Photo / Reuters Photos)
Inventories have started to recover across the industry, with Cox Automotive estimating that there was a 37-day supply in July, which was up from 29 days the year before, but still about half that of the historical average.
Toyota’s head of sales, Jack Hollis, does not think the car buying experience will ever return to pre-shortage norms. (Kyle Grillot/Bloomberg via Getty Images / Getty Images)
Hollis said the stock at some Toyota dealers had dropped to as little as 36 hours in recent months, but predicts that even when the supply chain is fixed, things will never return to the way they were, with lots full of cars waiting for customers to drop by.
«It all comes back to what the customer is wanting and needing, and they’re getting very used to an online experience,» Hollis said. «The process of buying a car is different, even the pricing. Some of the highest customer satisfaction scores in the entire industry are occurring right now, and everyone’s buying a vehicle at MSRP.»
The Toyota bZ4X is the brand’s first mass-produced battery-electric vehicle. (REUTERS/Mike Blake)
Hollis also defended Toyota’s plans to offer a wide range of vehicles, including hybrids, in the coming years, rather than committing to going all-in on electric vehicles. He said it is the best approach to reduce overall emissions.
«In my experience over 31 years in this industry, when government and others start telling consumers what they must have, consumers start to push back,» Hollis said, adding that Toyota «may not move first, but it will move best.»