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Automakers Post Record Quarterly Earnings Amid Chip Shortage

Toyota and Honda, two of the biggest automakers worldwide, recently revealed record quarterly earnings, even amid the global chip shortage. However, because of recent increases in COVID-19 around the world, as well as because of the existing chip shortage, many automakers have warned investors and the public about the future to come for the industry.

For many months now, the auto industry has suffered from a global chip shortage that has hindered overall production — which in turn has affected the price of cars and overall sales. However, even amid these global problems, Toyota and Honda have been able to thrive in the last quarter. Both companies have raised their annual profit forecast as a result.

Toyota hasn’t been as affected by the chip shortage, when compared to other automakers around the world, because of the stockpile they had of semiconductor chips. After the Fukushima earthquake in 2011, Toyota decided to stockpile these chips to keep their business in the best shape possible, no matter what they faced. This has worked out for them amid the global chip shortage.

However, new COVID-19 worries could threaten the stability of auto manufacturers, especially at the factory or manufacturing level. Honda and other Chinese-based car manufacturers have been forced to close some factories down in the last few weeks as COVID-19 cases soared in their factories, or in clusters to where the factory is located. As the delta variant of the virus continues to infect people, this may happen to other automakers in other parts of the world

The chip shortage will also continue to be a problem — something many automakers recently announced. BMW warned that the shortage will continue to affect their production cycle and their overall sales well into the next year. Stellantis also said as much. General Motors also announced recently that the company will shut down many of its North American plants as a result of this chip shortage. Toyota, while doing well, also was forced to suspend production at some of their plants in Thailand and China because of raw material shortages.

Therefore, automakers will have to continue to work through COVID-19 worries and raw material shortages until next year, according to most economists and industry executives. However, if Toyota and Honda are any indication, the industry may continue to prosper even with these issues.

In 2020, when many in the United States were in the beginning stages of the pandemic, auto sales skyrocketed. While sales have now slowed down in 2021, automakers have still managed to thrive and have high annual profit forecasts. 

Of course, the chip shortage and the new delta variant concerns may change all of this. It was recently announced that China has recorded the most infections of the virus seen since January. This could affect the many car manufacturing factories in the country, which will affect the overall business. 

The United States has also seen a surge in COVID-19 virus infections. Plus, the chip shortage will keep playing a factor, especially if regulations or restrictions from new infections affect the global supply chain again.

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