Toyota cuts production target amid chip shortage, profit drops ‎‎25%‎

Toyota Motor Co. on Tuesday posted a worse-than-expected 25% drop in quarterly profit and lowered its annual production target, as the Japanese automaker grapples with rising material costs and a chronic shortage of semiconductors.

The world’s largest automaker in terms of sales also warned of the continued difficulty of predicting the future after it recorded its fourth consecutive quarterly decline in its profits, which indicates the strength of the adverse factors facing the activity.

According to Reuters, Kazunari Kumakura, the group’s purchasing manager, said, “We are past the worst stage, but… this is not necessarily a situation where we get all the supplies. I don’t know when the chips shortage will end.”

The company’s operating profit in the three months ended September fell to 562.7 billion yen ($3.79 billion), well below the average profit estimate of 772.2 billion yen in a Refinitiv poll of 12 analysts. Toyota’s sales brought in a profit of 749.9 billion yen a year ago, and the company’s profit was 578.6 billion yen in the first quarter.

The global shortage of auto chips continues, Kamakura said, as chip manufacturers have prioritized supplies destined for electronic goods such as smartphones and computers, while natural disasters, COVID-19 shutdowns and factory disruptions have slowed the recovery of auto chip supplies.

He added that the supply of old-style semiconductors, which attracts few capital investments at the moment, will remain scarce.