Daily Management Review

Microchip shortage leads to nearly 20% drop in car production in Japan


A shortage of microchips resulted in a sharp drop in car production in Japan and a significant drop in industrial production in the country as a whole.

Japan's Ministry of Trade released data for May, showing that the country's industrial production fell by 5.9% compared to April. This is the first decline in three months and the biggest in the past year. It was also much larger than analysts surveyed by Bloomberg had expected. Their average estimate of the expected fall in production in the country was 2.1%.

According to the ministry, in May production fell in 13 out of 15 production sectors surveyed. However, such a significant drop in output is a consequence of reduced production primarily in the automotive industry. Domestic car production fell by 19.4% in May as a result of a massive shortage of microchips in the market.

For example, Toyota produced only 274,000 cars this month, which is almost 100,000 fewer than before the COVID-19 pandemic. For the same reason, significant output reductions were seen in electrical, manufacturing as well as information and communications electronic equipment - all of which require large quantities of microchips.

source: asahi.com