Chip shortage forces Subaru to cut the annual output target.

Japan’s Subaru Corp. reduced its annual output target by nearly 10% on Wednesday. This comes amid ongoing fallout from semiconductor shortage that continues to hamper automakers around the globe.

The carmaker said the shortages were most acute among parts for immediate delivery in the spot market and the lack of supply is expected at most until around June before recovering.

Coming down 9.3% from a previous forecast of 970,000 units, Subaru said it now expects to produce 880,000 vehicles this fiscal year through March.

“In the third quarter, we managed to keep the decline to about 20,000 units compared to our plans through our efforts,” said Subaru’s chief financial officer, Katsuyuki Mizuma.

Mizuma said, Subaru expects to make 70,000 fewer vehicles than planned previously, in the fourth quarter ending March 31.

Following the release of the results, the company’s shares slipped, ending 1.9% lower at 2,118 yen compared to a flat broader market. Subaru expects to reach global production of 1 million vehicles next financial year. Toyota Motor Corp owns a 20% stake in Subaru.

After cutting down output following the pandemic, many automakers have been trying to catch-up with productions, with chipmakers sending shipments to the consumer electronics industry.

On Wednesday, Subaru lowered its annual global sales forecast by 5.4% to 870,000 vehicles from its previous forecast, though it still is a rise of 18.5% compared to the 2022 financial year.

 The expected decline is in global sales is mostly in the U.S. market, where Subaru sells two-thirds of its cars, including the popular Forester and Outback models.

The company’s annual operating profit is kept unchanged at 300 billion yen ($2.29 billion), citing its efforts to control costs and boost efficiency from manufacturing to sales, as well as exchange rate assumptions.

source: reuters.com