Published in Transportation

Japanese car makers not too worried about chip shortage

by on18 February 2021

No problem for us

The global semiconductor chip shortage is not likely to significantly affect the financial profiles of Japan’s Toyota or  Honda.

According to ratings agency Fitch, the automakers have enough financial flexibility to absorb more costs and maintain significant rating headroom, even if the shortage persists till the second half of 2021, according to the statement.

The automobile industry has been grappling with a shortfall in chip supply since the end of last year, driven by coronavirus lockdowns in Southeast Asia and bulk-buying by US sanctions-hit Chinese tech giant Huawei Technologies, among other reasons.

The shortage prompted top  automaker General Motors to extend production cuts at three North American plants last week, while Honda Motor and Nissan Motor were set to sell a combined 250,000 fewer cars in the current financial year.

Toyota shrugged off the issue in its quarterly report last week and said it has up to a four month stockpile of chips, with no immediate hit to production expected.

“We believe the shortage should ease or even be resolved in the second half of 2021 as suppliers boost production for automotive clients”, Fitch said.

Top economic and national security officials in the White House have launched a new effort to help the US auto industry fight the chip shortage, a White House official said on Thursday.

The issue could impact nearly one million units of global light vehicle production in the first quarter, according to data firm IHS Markit.

Last modified on 18 February 2021
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