Japanese car production is back in full force, but for how long?

As early as this month, Toyota plans to shut down several plants as the chip shortage continues.

Japan’s car factory production grew by 43%, the fastest pace in history. This happened in November last year. The reason is the need for more cars and especially the easing of supply conditions in the global chain.

All this has helped Japanese car production emerge from its recent downturn and hope for optimistic prospects for a strong economic recovery in the new 2022 year.

But while improved production conditions provide some relief for Japanese brands, persistent global semiconductor shortages and the risks of new coronavirus variants are expected to obscure the bright prospects for the world’s third-largest economy.

However, the Japanese are doing everything possible and thanks to timely brands their production continued to grow by 7.2% in December compared to the previous month, marking its biggest jump since 2013. This means that production has increased dramatically and recorded a faster growth of 4.8%, with a profit, according to a study by Reuters.

“Japanese car production is recovering and will continue to do so,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “But from a global perspective, and especially because of the chip shortage, the pace of recovery is unlikely to be as fast as it has been in the last two months.”

The data show that the production of cars and other motor vehicles increased the most, by 43.1% compared to the previous month, in November last year. However, despite higher productivity, Japanese carmakers are still unable to shake off the ongoing global supply and chip supply problems.

Japan’s leading carmaker Toyota Motor Corp said last week it would suspend production at five local factories in January due to supply problems and a health crisis.

Analysts say the automotive sector may still be negatively affected by the disruption of chip supplies as chipmakers focus on supplying their latest products to technology companies, from which they earn more.

“What is required for cars is not state-of-the-art chips,” said Chihiro Ota, general manager of investment research and investor services at SMBC Nikko Securities. – They need older generation models, and microelectronics manufacturers are already focusing on newer models for smartphones, computers and all other “black goods”.

Officially, the Ministry of Economy, Trade and Industry in the Land of the Rising Sun (METI) warned that the forecasts of companies in the monthly survey tend to be overly optimistic, but the ministry said it expects production to grow by 1.6% in January and by up to 5% in the following winter months.

More generally, analysts expect Japan’s economy to pull 6.1% year-on-year in the current quarter, recovering from a third-quarter decline last year with an expected recovery in consumer and corporate activity.