Toyota and Honda profits fall due to chip shortages

Toyota reported nearly a 6 per cent drop last quarter with profits totalling 791.7bn yen (£5.1bn), down from 838.7bn yen (£5.4bn) the previous year. Honda fared even worse, with profits dropping by a sizable 32 per cent to just 192.9bn yen (£1.1bn), down from 284bn yen (£1.8bn) the year before.

Both firms anticipate that the chip shortage will continue to affect them over the next financial year.

In June, an executive at chipmaker Intel said that the global semiconductor shortage could take many years to resolve as global supply chains continued to struggle under the “explosive growth in semiconductors” required for much of the world’s population to adjust to the coronavirus pandemic.

While Intel's plans to expand its US chip manufacturing operations, with a $20bn investment towards two new factories in Arizona, could help rebalance the semiconductor supply chain, facilities such as this often take years to construct before they can start commercial production.

Toyota sold 2.5 million vehicles around the world during its third quarter, down from 2.8 million vehicles the same period a year ago, and lowered its full-year sales forecast to 8.25 million vehicles from an earlier 8.55 million vehicles.

The company also apologised for the production delays caused by the shortage of chips and other parts because of production issues caused by Covid-19 measures.

“We apologise for the inconvenience caused to customers who have to wait a long time until delivery, but we will continue to make improvements through ‘All-Toyota’ together with our dealers and suppliers,” it said in a statement.

Honda also said that its manufacturing had been affected by delays due to Covid-19 restrictions adding that rising material costs have also created problems. Cost-cutting efforts have allowed it to raise its profit projection however.

Last August, the Society of Motor Manufacturers and Traders, which represents UK carmakers, reported similar problems, with a dramatic fall in car production being blamed on staff shortages associated with the ‘pingdemic’ and the ongoing shortage of semiconductors.