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Toyota halts factories in Thailand as COVID hits supply chain

Disruption to sourcing stops Japanese car group's regional manufacturing hub

Annual production capacity at Toyota's three factories in Thailand is 760,000 units. (File photo by Reuters) 

BANGKOK -- Japanese auto group Toyota Motor has halted operations at its three factories in Thailand as the country's delta-variant COVID epidemic disrupts the supply of key automobile parts.

The closures underline how the pandemic is still putting the automobile supply chain under strain. The stoppage started from Wednesday (July 21) and will last at least until July 28, Nikkei has learned. Toyota said it will "assess the situation and decide" whether to resume operations from July 29.

The carmaker has sourced wire harnesses to connect electrical components from an external factory, which was recently forced to shut down temporarily due to an outbreak of the virus.

Due to local holidays, the Toyota factories were originally scheduled to close in any case from July 24 to 28. If the company can address the sourcing issue before July 29, it will be able to limit the adverse impact of the supply chain problem to just three days.

The factories' annual production capacity is 760,000 units, but in 2020, 440,000 automobiles were manufactured. Thailand is the third-biggest overseas production hub for Toyota, after China and the U.S.

Its Corolla sedan and Hilux pickup trucks are the main models manufactured in Southeast Asia's second largest economy. Half of the vehicles made are sold locally and the rest are exported globally.

This is the second time Toyota's production in Thailand has been disrupted by the COVID-19 pandemic. The factories closed during Thailand's first wave in March 2020.

Thailand's third COVID wave intensified in July due to the influx of the delta variant, which swept India first and is now overwhelming Southeast Asia. The Thai government resorted to a business lockdown of affected provinces to contain the situation. Toyota factories were included in those areas, but car production was not among banned activities.

Elsewhere in Southeast Asia, Malaysia went into a nationwide lockdown in June, forcing car factories of Toyota and Honda Motor to close. Toyota produced about 50,000 cars last year in Malaysia. Honda's yearly capacity in Malaysia is 300,000 motorcycles and 100,000 cars.

Indonesia has now overtaken India as the Asian epicenter of the pandemic. Daihatsu Motor trimmed back its production in the country. Some Japanese companies have decided to send expats and their families back to their home country as the medical emergency has grown in the archipelago.

Additional reporting by Masayuki Yuda

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