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Toyota Suspending Production at 2 Japan Plants | The Motley Fool

Toyota (NYSE:TM) announced in a tersely worded press release Tuesday that it is halting productions at three production lines, located in two of its factories in Japan.

The company said the shutdowns were due to a “parts shortage.” Reporting on the matter, Reuters said more specifically that the culprit was the global shortage of computer chips.

Image source: Toyota.

The lines at the plants, one located in Iwate and the other in Miyagi, produce the C-HR, Yaris, and Yaris Cross models for the domestic market. Their operations will be suspended for three to eight days next month, depending on the production line. All told, the shutdowns will affect the manufacture of 20,000 vehicles.

In its press release, Toyota stressed that these are “only vehicles which affect delivery to customers.”

The chip shortage is due to a number of different factors. Demand is rising sharply as economies gear up to emerge from the pandemic, a trend exacerbated by the world’s reliance on tech solutions to help it get through the outbreak. Finally, more and more goods in general require or are enhanced by a digital “brain,” a trend that contributes to demand. As a result, many sectors of the global economy are affected.

For the moment, the shortage isn’t hitting Toyota particularly hard, as those production lines represent a limited part of its overall domestic production. As one of the top global carmakers, Toyota has production facilities all over the world.

Still, even though the suspension is minor and small-time for now, investors should watch the company for signs of bigger shutdowns this summer. If the chip shortage worsens badly, several might be in store for the big carmaker.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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