Toyota unfazed by chip shortage

Toyota Motor Corp forecast its profit would bounce back to pre-pandemic levels this year, as the world’s biggest automaker exuded confidence it can tackle a global chip shortage that has stung its rivals.

Japan’s top automaker, which has been stockpiling the semiconductors that are used in everything from engine maintenance to car safety and entertainment systems, said on Wednesday it is not seeing any major short term impact from the shortage which has been baked into its forecasts.

Toyota also announced a $2.3 billion share buyback, a one-to-five stock split and set bigger targets for electric vehicles (EVs) production.

The upbeat forecast for the full fiscal year reinforces Toyota’s robust growth momentum that saw its March-quarter profit almost doubling and deepens a performance divergence with its rivals, who are battling billions of dollars of lost revenue due to the chip shortage.

CFO Kenta Kon said Toyota, famous for its just-in-time inventory management, benefitted from efforts to improve its supply-chain management to mitigate the impact of natural disasters following the Fukushima earthquake in 2011.

“We are now able to make assessments of alternative products in a speedy matter. That is one of the factors of us being able to mitigate the impact of semiconductor supply shortages,” he told a media briefing. The Toyota executive warned against complacency, though, saying the shortage situation was still fluid and the impact in the second half of the fiscal year was uncertain.

Toyota surprised rivals and investors last quarter when it said its output would not be disrupted significantly by ongoing chip shortages even as Volkswagen, General Motors, Ford, Honda and Stellantis, among others, have been forced to slow or suspend some production.

The global auto industry has been grappling with that chip shortage since late last year, which was worsened in recent months by a fire at a chip plant in Japan and blackouts in Texas where a number of chipmakers have factories.