With the growth of technology, the automobile industry can no longer do without microchips. In fact, the microchip has become a fundamental component of modern cars. These chips control almost everything from the engine to the door locks. But there is a problem. The global shortage of microchips has created a supply chain that is totally out of balance, and this month, one of the largest car manufacturers globally, Toyota, announced it will impact its production.
Reuters reported that Toyota announced that it plans to only produce about 800,000 vehicles worldwide in October due to a shortage of semiconductors. This is nearly 100,000 less than its average monthly production plan vehicle.
The world’s largest automaker said last month that it aims to produce about 900,000 vehicles per month from September to November. Now, Toyota expects to produce an average of about 850,000 vehicles a month from October to December. However, we must mention that Toyota still retains its target of 9.7 million global vehicle production for the current fiscal year. Thus, its plans for the year that ends in March 2023 remain unchanged.
According to Toyota’s production plan for October, the company will suspend production on 10 production lines at seven domestic plants for up to 12 days.
Recently, Fortune reported that Murat Aksel, Head of Procurement on Volkswagen‘s board of directors, said that the chip shortage is not expected to end in 2023. However, this is not new because, before this, various companies in the field predicted that this would last at least two years. Anyway, because of this, Volkswagen is preparing for a “new normal” of supply chain disruptions.
As some research data show, the global average chip delivery cycle (the time it takes for a chip to be ordered to delivery) in August was 26.8 weeks. This is one day shorter than the average delivery cycle in July. It is narrowing for the third consecutive month.
There are various factors behind the chip shortage problem worldwide. Some of them are related to COVID-19, some refer to the war in Ukraine, and some come from increased demand for various “smart” products. We mean there are more products requiring chips for their operations. Let’s see how this will evolve in the coming months.