Why Toyota Retains Lead in Car Sales Globally Amidst Chip Shortages

Japanese car manufacturer, Toyota on Friday said its vehicle car sales in 2021 surged by 10.1 percent, beating German counterpart, Volkswagen and Electric Vehicle, Tesla to having the highest sales record in the world.

Maintaining the top sales record for two years in a row, Toyota Motor Co. stated that it sold 10.5 million vehicles in 2021, including those by affiliates Daihatsu Motors and Hino Motors.  That is 5 percent fewer than the number sold in 2020, its lowest sales figures in 10 years, and more than 8.88 million vehicles delivered by Volkswagen AG within the same year.

Toyota clinched the position for the first time in five years in 2020, with CEO, Akio Toyoda describing the company’s operations unit as higher than that of the EV, Tesla.

Toyoda said, “What we have and what Tesla doesn’t have is the units in operation more than 100 million vehicles out in the world.”

The company still records success despite disruptions which include the pandemic, shortages in semiconductor chips supply and a large competitive market.

Many car manufacturers in Asia and especially Europe have had to reduce output in 2021 especially due to the shortage of semiconductor chips used in vehicles for critical functions, such as sensing, safety features, power management, displays and control.

According to analysts at the Society of Motor Manufacturers and Traders (SMMT), the impact of the chip shortages, created by pandemic-related shutdowns of factories in the Far East, is expected to reduce later this year. The problem may likely continue up till 2023, they said.

Investors King learnt that one reason the Japanese car maker has an upper hand could be as a result of the presence of top chip manufacturing company, the Taiwan Semiconductor Manufacturing Co. (TSMC) in Japan. Also, electronic manufacturers in Asian countries like China and South Korea, including Taiwan produce more semiconductors than any region in the world.

According to the Wall Street Journal, the TSMC announced that it will build a chip manufacturing plant in Japan to boost its production levels during the global semiconductor shortage that’s affecting industries of all types.

Although Toyota’s sales soared last year, the company has said it may likely fall short of a production target of 9 million vehicles in the business year that ends on March 31st because of disruptions linked to COVID-19. The company is also set to release its third-quarter earnings on Feb 9, this year.