Toyota, a significant chip provider suspend production because of an earthquake in Japan

The world’s top-selling automaker Toyota said Friday it will end operations on most of its Japanese production lines for three days as parts supply is hit by a new strong earthquake.

A significant earthquake this week in Japan is creating unexpected issues for the generally obliged global automotive supply chain, which keeps on managing through issues brought about by the Covid pandemic and Russia’s ongoing attack on Ukraine.

As organizations monitor and assess potential residual effects of Wednesday’s 7.4 magnitude earthquake on their supply chains, auto organizations most promptly affected included Toyota Motor and Renesas Electronics, a significant provider of semiconductor chips for the automotive industry.

The 7.4-magnitude quake shocked east Japan on Wednesday night, wrecking a bullet train and at first cutting power to over 2,000,000 homes. Three deaths have been connected to the quake off the coast of Fukushima, which was gone before by a 6.1-magnitude shake in a similar region.

Research firm LMC Automotive expects the earthquake should prompt lower vehicle production this year of somewhere in the range of 25,000 and 35,000 vehicles and trucks, adding to as of now diminished expectations because of an ongoing shortage of semiconductor chips and the war in Ukraine.

“This is just another layer on top of an already fragile system where we’re seeing a lot of pressure on the manufacturing side of the business,” said Jeff Schuster, LMC’s president of the Americas. “It’s certainly something the industry didn’t need at this point.”

Toyota on Friday said it would suspend operations at more than half its plants across Japan. The world’s biggest automaker by volume said 18 creation lines at 11 plants (out of 28 lines at 14 plants) would be down for three days one week from now because of supply issues brought about by the earthquake.

“Due to the parts shortage resulting from suppliers affected by the earthquakes, additional adjustments will be made to production operations in some plants in Japan as follows,” Toyota said in a statement.

The closures were reported a day after Toyota cut production output by 150,000 units from April to June because of developing supply chain uncertainty.

For over a year now, the global automotive industry has been managing a global shortage of semiconductor chips brought about by plant closures toward the start of the Covid pandemic. The chips are the most prominent issue amid global supply chain issues brought about by the pandemic, increasing costs, inflation, and Russia’s attack on Ukraine.

“The top line for this is it’s another impact on an already constrained system,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility, formerly IHS Markit. “It does appear to be a short-term impact … but it’s just not industry needs to deal with right now.”

Renesas, which apparently makes almost 33% of the microcontroller chips used in cars worldwide, works three plants near the earthquake’s epicenter in northeast Japan, as indicated by the organization.

The Tokyo-based semiconductor provider said it’s attempting to restart the plants and return them to pre-earthquake production volumes by Wednesday, including one as soon as Sunday.

The significance of Renesas in the global automotive semiconductor supply chain was featured last year following a fire at one of the plants that caused automakers, for example, Ford Motor to fundamentally cut production at facilities, including numerous for North America.

Ford teams “have been monitoring the situation very closely and actively working to determine what, if any, impact this might have on our operations,” an organization representative said Friday. General Motors put out a comparative announcement.

Smaller Japanese automaker Subaru on Friday said it would suspend production Friday and Monday at two auto assembly plants and an engine and transmission plant because of the earthquake.

“Subaru Corporation will temporarily suspend production at its automobile manufacturing facilities due to interruptions in the supply of certain parts, as operations of the supplier factories for those parts have been affected by the earthquake,” Subaru said in a statement.

Representatives for Japanese automakers Honda Motor and Nissan Motor said there were almost no effects on their operations because of the earthquake. A Honda representative said the organization suspended a night shift at one Japanese plant when the earthquake happened.

Toyota will suspend operations on 17 of its 28 domestic production lines from Monday to Wednesday, and another line simply on Monday.

The decision will affect 11 factories in total and incorporates a few lines run by Toyota’s subsidiaries Hino and Daihatsu.

A Toyota representative let AFP know that the stoppage will influence the production of roughly 20,000 vehicles.

The auto goliath has previously been compelled to bring down its production goals due to pandemic-related supply chain issues and the global chip shortage.

The organization likewise ended operations at each of the 14 Japanese plants for a day last month, after one of its suppliers suffered a cyberattack.

Notwithstanding these challenges, Toyota had the option to hold its crown as the world’s top-selling carmaker in 2021 and posted a forecast-beating quarterly net profit.

The natural disaster and suspension of tasks come as the globe has already been suffering from a semiconductor shortage for months.

The issue will keep on hitting automobile organizations that’ve battled with their supply chains all through the pandemic.