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Toyota to Cut Output as Chip Shortage Finally Catches Up to It; Car maker says it will cut production in Japan by 40% in September Mclain, Sean . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]. 19 Aug 2021. ProQuest EX 38 FULL TEXT TOKYO-The global semiconductor shortage has finally started to bite at Toyota Motor Corp., highlighting how a resurgence in Covid-19 infections from the Delta variant is now stifling chip manufacturing in Southeast Asia, worsening a parts crisis for car companies. Japan's largest car maker said Thursday it was cutting production in the country by 40% in September because of a shortage of semiconductors, highlighting how the scarcity is hitting even the best-prepared companies. Ford Motor Co. and General Motors Co. also said this week they are scheduling more downtime at several North American factories, in part because virus-related restrictions overseas are further adding to chip-supply constraints For much of this year, the chip-shortage challenges in the auto industry have largely stemmed from car companies miscalculating how quickly auto sales would bounce back and not ordering enough semiconductors. Now, the auto industry is confronting a new wrinkle with a resurgence in Covid-19 infections in Southeast Asia, particularly in Malaysia, denting output at computer-chip factories that are already straining to fill orders. This region is where semiconductors are assembled into small components that control everything from engines to headlights. Toyota's cuts mostly affect plants in Japan and some of its bestselling vehicles. One of Toyota's main plants near its headquarters in Toyota City. which produces the RAV4 sport-utility vehicle and Corolla sedan, will close from Sept. 1 to 17. The nearby Tsutsumi plant that produces the Camry and Lexus ES sedans faces a similar period of closure. In North America, the Japanese auto maker plans to reduce factory output by between 40%% and 60% in August, a spokesman said. The cut will leave Toyota with 60,000 to 90,000 fewer vehicles rolling off the assembly line during this time. affecting a range of models. It also expects manufacturing disruptions to cost it another 80,000 vehicles in lost North American output in September, although its estimates remain fluid. Toyota doesn't expect the reduction to affect employment at this time, the spokesman said. "We sincerely apologize for the inconvenience caused to our customers and suppliers," Toyota said. Malaysia implemented a countrywide lockdown in June and closed most factories, in an attempt to stem an outbreak of the highly infectious Delta variant. Those measures have failed thus far, and the prime minister resigned this week amid criticism of the lockdown. Toyota officials said Aug. 4 that production wasn't improving and the shortage of semiconductors was a nagging problem. They cited lengthy factory closures in Malaysia and Thailand as a particular issue. Toyota shares fell 3.5% shortly before markets closed in Tokyo as investors reacted to a report about the cuts in the Nikkei newspaper. The Japanese car maker had touted its ability to insulate itself from the global shortages that burned its peers thanks to stockpiles of components and close relationships with suppliers. ProQuest PROQUEST.COM PDF Page 1 of 9At a February briefing, Chief Financial Officer Kenta Kon said people outside Toyota were saying the semiconductor shortages could last through the summer, but he said Toyota's own people were telling him, "It doesn't look like it will go that far." Other global companies have also had to push back projections for a return to normalcy. with many now saying shortages of components could stretch into 2022 Ford said it plans to cut production at one of its two F-150 pickup-truck plants next week due to a lack of semiconductors, adding to a string of disruptions at its U.S. factories that began earlier this year. The U.S. auto maker said the supply problem stems from a Covid-19 outbreak in Malaysia. Researcher AutoForecast Solutions estimates Ford this year has lost output of more than 160,000 F-1505, its top-selling vehicle and main profit driver. Additionally, rival GM plans to extend shutdowns at several North American plants into September, including those building popular SUVs, such as the Chevy Traverse and Buick Enclave. GM Chief Executive Mary Barra said earlier this month she expects the Detroit auto maker will continue to grapple with the chip shortage through the remainder of 2021 and into next year. GM expects to make about 100,000 fewer vehicles in North America in the second half of the year. The shortage has had a silver lining for Toyota and other car companies because the dearth of cars on dealer lots has pushed up prices. Toyota reported a record $8.2 billion profit in the April-June quarter, the first quarter of its fiscal year, representing 40%% of its profit projection for the full fiscal year. But it kept its outlook for the full year unchanged, citing Southeast Asia issues, in what proved to be a harbinger of Thursday's announcement of production shutdowns. Ben Foldy and Mike Colias contributed to this article. Write to Sean Mclain at sean mclain@wsj.com Toyota to Cut Output as Chip Shortage Finally Catches Up to It Credit: By Sean Mclain : Shortages Profits Automobile industry Suppliers Manufacturing Factories; : General Motors Corp Toyota Motor Corp; : 42311 : Automobile and Other Motor Vehicle Merchant Wholesalers 33611 : Automobile and Light Duty Motor Vehicle Manufacturing 42369 : Other Electronic Parts and Equipment Merchant Wholesalers Shortages; Semiconductors; Coronaviruses; COVID-19; Profits; Automobile industry; Suppliers; Vehicles; Manufacturing; Factories Southeast Asia; Japan : General Motors Corp; NAICS: 333415, 336110, 336390 Toyota to Cut Output as Chip Shortage Finally Catches Up to It; Car maker says it will cut production in Japan by 40% in September Mclain, Sean Wall Street Journal (Online); New York, N.Y. 2021 ProQuest PROQUEST.COM PDF Page 2 of 9