Toyota Finally Hit by Chip Shortage

[ernieb]

I’ve just read that Toyota September production will be reduced by 40%, 360K cars (140k in Japan), the UK is the only country to miss most of the reduction. The rise of Covid cases in the production plants is cited as a major contributor to the problem.

It’s going to be tough to get a car and impossible to negotiate a deal.

[FROSTYBALLS]

See earlier topic -

 

[ernieb]

Missed that post….

[Catlover]

The issue of shortage of chips is not only affecting Toyota, its ther car makers, and also other industries where chips are used ie mobile phones, computers etc.

I see that cars made at Burnaston and engines at Deeside may only be lightly affected, which is good if you fancy a Corolla hatch.

 

[Rav Rob]

On the Toyota site it estimated my specification as being 21 weeks (I was told 6 months at ordering so about right) but tells you other versions that are available quicker, annoyingly you can have a Black Excel AWD like I ordered but with Black leather in only 10 week.

In other colours too could have a car quicker but only with Black leather, I hate Black leather. So its the just the interior (Beige) leather that is causing me such a long wait.

[ernieb]

@Catlover, agreed, VW have said that they are in the process of detailing further production reductions along with just about all the car manufactures. Toyota's contingency plan has worked well up till now but it seems that the Delta, Delta + covid variants have pushed the chip buffers over the edge.  You have to credit Toyota with the long term business view to go against 'just in time' stock management and stock pile huge supplies of critical materials which have worked up till now.

I think the problem is further compounded by the fact that each manufacturer has had a foundry develop ASIC chips with their own functionality, technologies and interfaces wired in and therefore none of these chips are standard across the manufactures. I'm sure that chips are standard within car groups VW, Skoda, Seat etc., but in these cases it's likely that there will be a pecking order and that not all within the group will be using the same revision of the ASIC as the ones at the top of the pile. This must add to the problems of manufacture when there is limited capacity available.

[AJones]

50 minutes ago, ernieb said:

You have to credit Toyota with the long term business view to go against 'just in time' stock management and stock pile huge supplies of critical materials which have worked up till now.

Some articles point out that Toyota now stock pile parts because JIT has failed before, back in 2011 after the tsunami in Japan which caused huge disruption to supply chains, so they learned from it and stockpile parts to prevent a repeat occurrence.

The bit which surprises me about the whole chip shortage, is that the car manufacturers haven't been able to buy their way out of problems, the value of the microchips compared to the price of a car is likely to be pretty low, you would think they should be able and willing to pay a substantially higher price to secure a supply, easily able to out-bid the IT market and consumer products manufacturers where product values are a lot lower. 

[Rav Rob]

39 minutes ago, AJones said:

Some articles point out that Toyota now stock pile parts because JIT has failed before, back in 2011 after the tsunami in Japan which caused huge disruption to supply chains, so they learned from it and stockpile parts to prevent a repeat occurrence.

The bit which surprises me about the whole chip shortage, is that the car manufacturers haven't been able to buy their way out of problems, the value of the microchips compared to the price of a car is likely to be pretty low, you would think they should be able and willing to pay a substantially higher price to secure a supply, easily able to out-bid the IT market and consumer products manufacturers where product values are a lot lower. 

Exactly! There is plenty of silicon about for low margin products, you would think car manufacturers could buy their way up the production list.

I guess the tiny profit on a 100 million £1 solar garden light chips is better than a higher margin on 100,000 car indicator chips so its not worth them re-jigging.

[Catlover]

JIT will not be going anywhere soon, in my opinion.  To buy, generally, to stock pile will increase cost (buying in, borrowing, not seeing a quick return, cost of storage area) and that will mean the price of a car will increase. That is not what car manufacturers want nor their customers.               

The container ship, Evergreen, that blocked the Suez canal for days and days must have had a 1000 or more containers holding goods, plus dozens of ships had to go the long way round, that will have held up goods, some may have been chips. Due to Covid19 and shortage of work force many containers were not moving, empty ones included being in the wrong place, causing huge problems and massive increase in prices of goods. Why? Due to shortages of containers the transportation businesses are charging many times the usual rate to move goods around the world. It is reckoned price of goods in the next 4 months will rise dramatically. 

[ernieb]

I think I’ve said before that the problems have been exacerbated by flooding the the US, fires in Taiwan and Japan, factory closures to install new machines and processing plant and on top of all of this is Covid. The manufacturers also changed from car chips to consumer chips.  Chip manufacture is not, even today, an exact science pretty close, but things fail and any number of the multiple stages of manufacture. It is really not easy to take a damaged factory and bring it back online.  The company I worked for also manufactured two terminal devices, simple enough as it’s only a diode but these were for microwave applications (not the ovens) and these processes could be very difficult to control and produce the desired spec’d item. The massive relative size, complexity and component density puts ASIC chips on a different planet.

I also think that just about every part of the car now demands chips, it’s not just the ECU and a few others bits and bobs, there are literally hundreds of devices and one missing is a lost car build.

As I said earlier Toyota has made a pretty good fist of negating these issues not only by holding stock but investing in companies and entering onto joint ventures.  Companies such as Volvo, VW etc., are really up against it right now.

[Heidfirst]

3 hours ago, ernieb said:

I also think that just about every part of the car now demands chips, it’s not just the ECU and a few others bits and bobs, there are literally hundreds of devices and one missing is a lost car build.

 

Peugeot went back to using analogue dials in the 308 https://www.autoblog.com/2021/04/21/stellantis-peugeot-digital-dashboards-chip-shortage/

[Trewithy]

Lockdown around the world created a big demand for consumer goods as people bought new TVs and digital home entertainment devices. not to mention new fridges, washing machines etc.  So as car sales declined chip makers diverted production to consumer electronics.  Previously chips for motor companies was approx 10% of total output, and as this declined electronic companies found other markets.  As car sales declined motor companies were slow to place new orders and have now fallen down the pecking order.   It is going to take some time to get back to normal.

[Yugguy1970]

We are struggling at work to obtain new server stock.  What should come in weeks is now being quoted as months.

[ernieb]

Interesting news update on BBC web site, suggests that experts now predict that the shortage may last time the end of 2022, others suggest even longer.

https://www.bbc.co.uk/news/business-58230388

[Yugguy1970]

Existenal comment time.

This, like many of the events of the past couple of years have really shown how our modern society is built on a house of cards.

[ernieb]

Totally agree with that comment it’s all so very fragile, together with a few essential infrastructure basics, water, electricity, fuel, etc.

[AJones]

53 minutes ago, Yugguy1970 said:

Existenal comment time.

This, like many of the events of the past couple of years have really shown how our modern society is built on a house of cards.

I'm not sure it's that bad. The world hasn't stopped making microchips, there's been some impact on production from COVID and a fire at a plant, but it's still making them, and looking over a period of several years to a decade it is making more than ever before.

Delays and shortages of microchips aren't new either, go back to the 1990s and 2000s and there were regularly problems with shortages for computers chips, processors, memory chips. They are very difficult to manufacture, needing high specialised and expensive facilities so the output isn't easy to ramp up or down.

I think what the recent situation has exposed is how little most car manufacturers knew about the dynamics of the semiconductor industry and the critical links in their supply chains. It's taught them a hard lesson that while they are the big fish in the car components market, in the semi-conductor market they're an unimportant minnow.

It'll fix itself, I'd imagine the car manufacturers will start holding more semiconductors in stock, have contracts which secure production capacity for vital components all of which will probably see the car manufacturers paying more to ensure they get priority and become a valuable customers to the semiconductor manufacturers.

[Yugguy1970]

It will fix itself and like the lorry driver shortage drivers will be found because business, like nature, doesn't like a vacuum.

But if covid had hospitalised more people or if it had been deadlier and more contagious we'd have been in trouble.