Toyota Will Cut Domestic Production as Sales Plummet (Update4) By Tetsuya Komatsu and Makiko Kitamura Aug. 26 (Bloomberg) -- Toyota Motor Corp., Japan’s biggest automaker, plans its first long-term closure of a domestic assembly line as car sales in the country fall to the lowest in more than 30 years. Toyota, which cut domestic production 49 percent through June, will reduce output by about 220,000 vehicles by shutting down a line at its Takaoka plant from the fiscal first quarter of next year through the second half of calendar year 2011, spokeswomanRiriko Takeuchi said by phone today. Car demand has plummeted due to the global recession, forcing General Motors Corp. and Chrysler LLC into bankruptcy. Toyota, the world’s largest carmaker, earlier this month forecast a net loss of 450 billion yen ($4.8 billion) for the year ending in March. Toyota President Akio Toyoda, who took the helm in June, is slashing costs as he tries to avoid a third consecutive year of losses. “Toyota is desperate to cut costs,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc. in Tokyo. “The company needs to stop building unpopular and unprofitable cars.” Toyota will shift some vehicle production to affiliates during the closure, the company said. Vitz/Yaris compact cars will be made by Toyota Industries Corp.’s factory in Aichi prefecture, central Japan, while Ractis and ist compacts will be produced at Kanto Auto Works Ltd.’s plant in Iwate prefecture, northern Japan. Transferring Workers About 1,700 workers will be transferred to other Toyota factories, the company said. The Toyota City-based carmaker gained 1.5 percent to 4,110 yen at the end of trading in Tokyo. Nissan Motor Co., Japan’s third-largest automaker, is also forecasting a second straight loss of 170 billion yen this fiscal year. Honda Motor Co., the second-largest, forecasts a 55 billion yen profit, helped by its motorcycle business. Toyota has global production capacity of about 10 million units, spokeswoman Takeuchi said. Worldwide output may total 6.68 million this fiscal year, down from 9.24 million last year, according to a company forecast. The carmaker had a domestic market share of about 40 percent last fiscal year, excluding its Lexus brand. Toyota’s sales in Japan fell 23 percent through July. Honda’s domestic sales declined 12 percent in the same period, and Nissan’s dropped 22 percent. Exports Plunge Toyota will cut global capacity by 1 million vehicles this fiscal year, the Nikkei newspaper reported earlier. As parts of emergency measures to return to profit, Toyota aims to reduce production-related costs by 360 billion yen and fixed costs by 490 billion yen this fiscal year. Japan’s exports fell for a 10th straight month in July as demand from all of the nation’s major markets deteriorated. Shipments tumbled 36.5 percent from a year earlier, steeper than June’s 35.7 percent drop, the Finance Ministry said today in Tokyo. “The economy probably won’t recover until at least 2011, and even then we’re not sure,” Fukoku’s Sakurai said. “Toyota may even continue to close the line after that.” Toyota also plans to shut a joint-venture factory in California with General Motors Co., according to people familiar with the plan. GM said in June it would end assembly of Pontiac Vibes at the plant, where Toyota builds Corolla compacts and Tacoma pickup trucks. To contact the reporter on this story: Makiko Kitamura in Tokyo atmkitamura1@bloomberg.net
Thursday, 27 August 2009
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