Toyota shuts car plants for six weeks as VW warns of production cuts

The spread of the Delta variant of Covid-19 in Asia on top of the global shortage of microchips has prompted the world’s two largest carmakers, Toyota of Japan and Volkswagen of Germany, to cut or warn of reductions in production.

Toyota, the smaller of the two giants, said it would be shutting plants around the world through to the end of September as it tries to manage production bottlenecks. It will produce 40 per cent fewer cars than projected in the period.

Toyota’s factory at Burnaston in Derbyshire appears to have escaped the worst of the cuts, with the company saying it would only be affected by “minor adjustments” compared with its plants in France, the Czech Republic and Turkey.

Burnaston has been running at half capacity, producing not much more than 100,000 cars a year. Toyota also has an engine plant on Deeside in north Wales.

Toyota said it hoped to hit its target for the year of 9.3 million vehicles but added: “In October and beyond we think there are risks, so we will monitor the situation every day. We would like to recover as much as we can but we already have tight production plans.”

Southeast Asia has become the new hotspot for the Delta variant that first emerged in India. There are many automotive and microchip plants in the region because of its low cost of labour.

Global production of semiconductors has been hit by demand for consumer electronics, the stuttering recovery of automotive markets and production closures. There are around 1,500 microchips in the average new car.

Volkswagen, which also owns the Audi, Porsche, Bentley, Skoda and Seat brands, has been forced to cut production because of the shortage of silicon.

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

David Leggett, auto analyst at GlobalData, said: “The pandemic is clearly far from over — and as far as the auto industry is concerned, it has a sting in the tail.”