That Toyota RAV4 you’ve been thinking about buying?
You might have to wait a while.
Toyota on Thursday announced temporary vehicle production cuts at operations in Japan and North America due to the global shortage of semiconductor chips.
The move is expected to further cramp the availability of new Toyota cars and trucks, which have already been in short supply in some cases.
What vehicles will be limited?
“A little bit of everything,” Toyota spokesman Scott Vazin said in an email.
The slowdown in production affects all of the company’s North American plants, including factories in Indiana and Kentucky, and is expected to last through September and “likely” into October, Vazin said.
Toyota said it expects to reduce its output by about 60,000 to 90,000 vehicles in August and 80,000 in September.
Toyota has 14 plants in North America, including 10 in the U.S., with a total of more than 176,000 employees. The automaker’s U.S. plants made about 1 million of the 2.1 million vehicles the company sold in America in 2020.
The Toyota brand had only 20 days supply of new vehicles on hand at the end of July, while the company’s luxury Lexus brand had 23 days supply, according to Cox Automotive, which owns Kelley Blue Book and Autograder. The national average was 32 days.
“Toyota has been at or near the bottom for inventory for many months,” Autotrader analyst Michelle Krebs said in an email. “Lexus has been lowest among luxury makes.”
Part of the reason is that Toyota vehicles have been particularly popular during the pandemic, she said.
Toyota had already taken steps to reduce production in certain situations, including the output of the Tundra full-size pickup at its plant in San Antonio, Texas, said Chris Reynolds, Toyota North America executive.
“Long term we’re going to continue to work with our suppliers to get a better grasp of the global supply chain and minimize its impact,” said Reynolds, chief administrative officer of corporate resources.
Volkswagen and Toyota have become the latest carmakers to warn about production cuts because of the global computer chip shortage.
German car manufacturer Volkswagen said a semiconductor supply crunch could force it to slow production lines during the autumn, adding to cuts that have been in place since February. Japanese firm Toyota also reported that it would slash output by 40% in September.
Carmakers have struggled after a recovery in demand stretched supply chains earlier this year, with Covid-19 outbreaks across Asia hitting chip production and operations at commercial ports.
“We currently expect supply of chips in the third quarter to be very volatile and tight,” said Volkswagen, the second largest carmaker behind Toyota.
“We can’t rule out further changes to production,” the company told Reuters.
The Wolfsburg-based carmaker said it expected the situation would improve by the end of the year, and aimed to make up for production shortfalls in the second half as far as possible.
New car prices have begun to rise in response to the limited supplies of cars, but the most noticeable impact has been on the secondhand car market, where prices have jumped by 14% year on year in the UK and more than 40% in the US.
Toyota said it intended to reduce global production for September by 40% compared with its previous plan, according to the Nikkei business daily. This pushed its shares down by 4.4% on Thursday.
Shares in European carmakers and suppliers were also broadly weaker, with BMW, Daimler, Renault, Volkswagen and Stellantis – the maker of Peugeot and Fiat cars – all down by more than 2%.
The latest production woes follow news that German chipmaker Infineon, the top automotive supplier, was forced to suspend production at one of its plants in Malaysia in June, due to a coronavirus outbreak.
Reinhard Ploss, the Infineon chief executive, said earlier this month that the automotive industry faced “acute supply limitations across the entire value chain” and it would take until well into 2022 for supply and demand to be brought back into balance.
Analysts at ING said some Taiwanese semiconductor companies unaffected by the Delta variant of Covid-19 were pushing production beyond the usual 100% to satisfy demand.
Ford said on Wednesday it would halt output for a week on production lines that build its bestselling F-150 pickup trucks because of the shortage. The shutdown will begin on Monday.
Earlier this month, General Motors suspended production for a week at three North American truck plants, while Nissan halted it for two weeks at a Tennessee plant because of a Covid-19 outbreak at a chip plant in Malaysia.
Phone and computer makers have also reported semiconductor shortages. Apple executives said that while the impact was less severe than feared in the third quarter, it would get worse in the current quarter, and could hit iPhone production.
Made in Cambodia is a common label on clothing from shirts and skirts to cycling shorts, but these days there’s a good chance the bicycle itself will also have been made there.
The south east Asian nation is making the most of shifting global trade patterns to diversify its economy, and it is now listed as the fifth-largest exporter of bicycles in the world after China, Taiwan, the Netherlands and Germany.
But concerns over democratic freedoms mean there could be bumps in the road ahead.
At the Bavet Special Economic Zone, right on Cambodia’s border with Vietnam, and just 50km north west of Ho Chi Minh City, the industry is gearing up to make the most of growing demand.
Inside a factory belonging to Taiwanese-owned firm Speedtech, bicycle frames hang from hooks like meat carcasses at a market.
Workers, some in protective goggles or welding masks, are engrossed in their tasks along the production line, ignoring the biting scent of spray paint. The starting salary of $350 (£268) a month compares well with the garment industry, but the air is humid and heavy, and when the monsoon downpour arrives in early afternoon there’s a whoop of delight but no pause in production.
When Speedtech first arrived at Bavet in 2013 it was only doing final assembly, says vice-general manager, Aliette Tong. Now the workers weld and paint frames too. The factory can turn out up to 2,000 bicycles a day if the demand is there, he adds.
But the industry still has shallow roots.
At Speedtech everything other than the frame is imported from Malaysia, Indonesia, Japan or China, explains Mr Tong. Even the steel used to make the frame is imported from China.
“In this period, parts makers are more are interested in Vietnam,” he says.
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Moreover, the finished bicycles are exported, not from Cambodia’s main port at Preah Sihanouk, which is a gruelling nine-hour drive to the west, but via Ho Chi Minh City’s Cat Lai port, four to five hours east of here, even though that entails additional customs processes at the border.
What prompted Speedtech to move its operations from Vietnam to Cambodia in the first place, alongside two other Taiwanese-owned manufacturers, A & J and Smart Tech, was a decision by the European Union in 2005 to impose anti-dumping measures on Vietnam, making Vietnamese exports more expensive.
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