By Dhirendra Tripathi
Investing.com – Toyota ADRs (NYSE:TM) traded 0.3% lower in Tuesday’s premarket after the world’s largest carmaker warned it might miss its annual production target of 9 million vehicles because of a shortage of semiconductors.
The company rued that competition for chips meant it didn’t have enough of them to raise its output in time to make up for last year’s pandemic-led shortfall.
"Hitting the 9 million mark is going to be extremely difficult," Reuters quoted Kazunari Kamakura, a Toyota executive, as saying during an online briefing.
To meet its annual target, set in September, Toyota will have to build 1 million vehicles in March. Toyota said it will build 700,000 cars globally in February, more than last year, but 150,000 fewer than it had initially planned.
Bottlenecks due to shortage of chips forced carmakers like Toyota and Volkswagen (DE:VOWG_p) last year to curtail production for weeks at a stretch. While automakers compete with manufacturers of mobiles, laptops and other electronic gadgets for chips that are limited in supply, the problem was accentuated because of the pandemic. Factories were shut and ships were stuck at ports. Air transport was limited too.
Chipmakers have since committed billions of dollars to expand capacities. But new factories take time to come up while demand remains at record levels.