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Toyota, Volkswagen Drop As Chip Shortage, Covid Hit Output Plans By 

© Reuters.

By Dhirendra Tripathi – Toyota (T:) and Volkswagen stocks (DE:) dropped in Thursday trading as the world’s two biggest carmakers revealed continuing bottlenecks due to shortage of chips with the former planning a 40% cut in vehicle output.

Toyota fell 4.4% in Tokyo trading and Volkswagen was lower by 2.4% in Frankfurt on fears that shortages of chips are going to drag for some time yet.

The Japanese manufacturer will cut global production for September by 40% from its previous plan, the reported.

Toyota was aiming to make a little under 900,000 vehicles next month, but has cut that to about 500,000, according to the business daily. It will reportedly suspend production lines at domestic factories including its Takaoka plant in Aichi Prefecture. Production in North America, China and Europe may also be scaled back by tens of thousands of units.

In China and Thailand too, Toyota’s production is being disrupted, mainly due to the spread of Covid-19 cases and the measures taken to contain them.

Volkswagen followed Toyota later in the day to warn of chip shortages hurting output.

“We currently expect supply of chips in the third quarter to be very volatile and tight,” Volkswagen told Reuters. “We can’t rule out further changes to production.”

The shortage of chips has been hurting vehicle manufacturers for almost a year now. Automobile manufacturers have been among the worst affected by a surge in demand from rival sectors for devices like laptops, mobile and printers.

Automakers bore the brunt of the demand-supply mismatch as supplies of chips got diverted to more urgent and affordable digital devices. That development has come at a time when the auto industry is embedding more and more chips in its cars to manage functions from emissions control to autonomous driving.

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