(Bloomberg) — Toyota Motor Corp. slumped as much as 4.7% after a report the worsening chip shortage will force the world’s No. 1 automaker to cut global production for September by 40% from initial plans.
Toyota had intended to build about 900,000 cars next month, based on a forecast drawn up in July, but that number has been reduced to about 500,000 units due to chip supply issues, the Nikkei reported without attribution Thursday.
A growing outbreak linked to the delta variant of Covid-19 across Southeast Asia has also impacted upon the Japanese company’s procurement of auto parts, the newspaper said.
A spokesperson for Toyota declined to comment.
Toyota maintained its annual operating profit outlook earlier this month, disappointing investors that had been buoyed by its peer-beating financial performance on the back of brisk global demand for automobiles. The carmaker kept its forecast for 2.5 trillion yen ($22.7 billion) for the fiscal year through March, versus analysts’ average projection for 2.95 trillion yen.
While a shortage of automotive chips has hindered many rivals’ ability to capitalize on strong global demand for cars over the past nine months, Toyota up until now had been relatively unimpaired due to its supply-chain savvy and the strong stock it keeps of key components such as semiconductors.
An alarming Covid outbreak in Southeast Asia has however weighed on the company. Toyota has a large manufacturing presence in Thailand, where case numbers have been hitting records.
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Last month, Toyota said it was extending production halts in Thailand due to Covid-related parts shortages. The carmaker’s plants in the country have combined production capacity of 760,000 units per year.
Shares of Toyota’s suppliers and affiliates also tumbled, with Toyota Industries Corp. sinking 4.1% and Aisin Corp. down 5.8%. Toyota Industries generates 12% of its revenue from Toyota, according to Bloomberg data, while Aisin gets 57% of its sales from the automaker.
(Updates with context on Thailand from 7th paragraph.)
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