Toyota cuts production by 100,000 as auto industry craters – 24/7 Wall St.

Two years ago, it was unimaginable for a global automaker to cut production. Global demand for cars and light trucks was strong almost everywhere. This demand remains strong, but there are not enough cars.

The microchip shortage that has hit the industry has prompted Toyota to say it will cut global manufacturing from 100,000 to 850,000. This will affect corporate profits and the financial health of dealers, and it could cause consumers to postpone buying new cars for months or even years.

Depending on the year, Toyota is the world’s largest manufacturer, as it occasionally swaps places with Volkswagen. Because of this distinction, it can be argued that his fortune is as good a gauge as any for the short-term future of the industry.

The news means that the two American automakers, Ford and GM, could also miss their numbers. Shares of both companies slumped on weak sales volumes and suspicions that they cannot emerge as leaders in the electric vehicle portion of the industry. This means that current and future sales will be compromised.

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Many experts say that the shortage of semiconductors will last until next year. If so, there will be more reports like Toyota’s, and the industry will continue to limp.