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Toyota to cut production 40% on back of global chip shortage

Toyota is slashing vehicle production 40% in September as the global shortage of semiconductor chips continues to wreak havoc.

Toyota is reducing its planned global production for September by 40%, equating to around 360,000 vehicles

The world’s largest automaker revealed today it’s reducing its planned global production for September by around 360,000 vehicles, down to 540,000 units. This includes cutting 140,000 units at Japanese plants, while the rest are overseas. Its UK plant in Burnaston, Derbyshire, is believed to be unaffected though.

Despite the planned cuts, Toyota said its global production target would remain at 9.3 million vehicles for the year to the end of March 2022.

It’s the latest carmaker to scale down production in response to the supply shortages; OEMs including Ford, Honda, Stellantis, JLR and Nissan have also had to take action while Volkswagen said today that it might have to cut output further.

The latest production cuts will cause further problems for the fleet sector, which is already facing “worst-ever” production delays due to the chip shortage, but also coronavirus and Brexit. In June this year, FleetCheck warned that delivery times of up to a year are becoming common.

Speaking earlier this month, the Society of Motor Manufacturers and Traders (SMMT) said shortages of both semiconductors and staff – the latter due to the need to self-isolate – were throttling the UK car industry’s ability “to translate a strengthening economic outlook into a full recovery”. As a result, July new car registration figures hit their lowest level since 1998.

The SMMT has warned that the semiconductor shortage is likely to remain an issue until at least the rest of the year; a viewpoint echoed by software provider VNC Automotive, which says the challenges will outlast the pandemic.

And the Vehicle Remarketing Association (VRA) has also forewarned that the supply chain problems look likely to get worse before they get better. A recent report from the VRA indicates that the impact could last for some time – certainly well into the second half of 2021 and possibly into 2022.

It’s an issue that fleets will need to take charge of, according to the industry experts.

Earlier this year, the Association of Fleet Professionals (AFP) warned operators to start planning ahead for potential disruption to new vehicle supplies.

Key advice for fleets includes initially asking manufacturers and leasing companies about how existing deliveries and future lead times are affected.

Where vehicles are required to fill a gap, then short- or medium-term hire may be the best option, assuming vehicles are available.

The AFP has also called for the auto sector to keep fleets in the loop.

“What is most important, we believe, is for manufacturers and others in the manufacturing supply chain to continue to provide updated and accurate information. Fleets should be able to resolve most of the problems created by this situation but clarity is needed so they know exactly what problems they are likely to face,” stated Denise Lane, director at the AFP.

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.