Toyota and Honda, Japan’s two largest automakers, reported strong profits for the second quarter despite shortages of computer chips, which is continuing to snarl production at plants in China, which are also facing new outbreaks of COVID-19.
Toyota posted record quarterly earnings while Honda Motor Co. raised its annual profit forecast on Wednesday as post-lockdown sales surge, but the pair joined other automakers in warning that the global chip shortage would persist, according to a report from Reuters.
Honda reported a first-quarter operating profit of 243.21 billion yen or $2.23 billion compared with a 113.7 billion loss a year ago as car sales recovered from the impact of the COVID-19 pandemic. The company’s operating profit was double the average profit estimate of 119.2 billion yen based on nine analysts surveyed by Refinitiv.
COVID hinders production
A rise in COVID-19 cases has hampered production at suppliers and the car companies, compounding issues surrounding the dearth of semiconductors, which occurred because of the initial battle with the COVID-19 pandemic, the Japanese automakers said.
The two Japanese car makers face production problems in China, which on Wednesday reported the most new locally transmitted COVID-19 cases since January.
Honda suspended production at Wuhan plant on Aug. 3 due to an outbreak at a supplier, Executive Vice President Seiji Kuraishi told reporters, adding it was not expected to last long, Reuters noted.
Toyota’s operating profit soared to 997.49 billion yen $9.15 billion for the three months ended June 30 from the pandemic-hit first quarter of last year, beating an average analysts’ estimate of 752 billion yen.
The automaker was helped by strong production in the first half of the year as managed to avoid the shortages that plagued other carmakers around the world.
Toyota benefitted from a business continuity plan developed in the wake of the Fukushima earthquake in 2011 that required suppliers to stockpile chips, Reuters reported in March.
The global semiconductor chip shortage will cost automakers $110 billion in lost revenues this year, consulting firm AlixPartners said in May.