Global Chip Shortage Crisis: Toyota Suspends Operations of 2 Factories, Loses 20K Units!

The global chip shortage issue has had a huge impact on the automotive industry. The crisis that began at the end of 2020 is most likely expected to be ongoing for another one to two years, which may cause the reduction of production of cars all around the world. 

Japanese carmaker, Toyota recently announced the suspension of operations of three out of 29 production lines at its two plants starting from next month, which affects the production of more than 20,000 units vehicles.

Toyota announced that it will suspend two production operations at the Iwate plant; Iwate 1 that produces C-HR cars will be shut down for eight days and Iwate 2 that produces Yaris and Yaris Cross will be shut down for five days.

Toyota C-HR

Toyota Yaris

Toyota Yaris Cross

In regards to that, the Miyagi Ohira plant that is also a part of the Yaris Cross production will be closed for three days.

Hyundai plant in Ulsan, South Korea

Not only Toyota, other car manufacturers have also been taking the hit of the semiconductor chip shortage issue. Earlier this week, Hyundai Motor Group made the initiative to suspend the production at various factories that include Ulsan 5 that produces the Tucson SUVs and Ulsan 3 that produces Avante and Venue. 

On top of that, Subaru also took the approach to suspend their production operations located in Gunma Prefecture, Japan and the United States.

Last week, Nissan also mentioned that it needs to cut up to 250,000 units from its original production target.

Meanwhile, Mitsubishi Motors reported that their total car production this year was 40,000 units less than the expected amount.

Also receiving the brunt of this chip shortage is Mazda's car production operation which is expected to have a decreased production of up to 100,000 units of cars.

Not forgetting Ford that is expecting a loss of up to 1.1 million units of its targeted production volume.

The Semiconductor Chip Shortage Involves Losses Reaching Up To 110 Billion USD (RM455+ Billion)

Based on an analysis conducted by AlixPartners, the shortage of semiconductor chips will affect the production of a total of 3.9 million vehicles in 2021.

“There are around 1,400 chips in an average car today, and that number will continue to increase as the industry moves towards the production of electric cars, more connected vehicles and also autonomous vehicles. Therefore, this is a very critical issue for the industry,” said the managing director of automotive and industrial practices, AlixPartners, Dan Hearsh. 

"But the most important thing for companies right now is to do their best to minimize the short-term effects of disruption (lack of chips), which may involve everything from contract renegotiation to managing expectations from borrowers and investors. What's important is to be proactive, and to equip oneself with the necessary information and analysis."