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Toyota orders further production halts at factories

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Production cuts in Japanese plants? But how can this be? Toyota is an all American company! You mean they aren't ALL built right here???!?!??!??


TOKYO (Reuters) – Toyota Motor Corp (7203.T) is to halt production at its Japanese plants for 11 days in February and March as a sharp slide in U.S. sales has left dealers' lots full of unsold cars.

A 37 percent slump in December sales in Toyota's biggest market was its sharpest fall in more than a quarter of a century and worse than declines at struggling U.S. rivals General Motors (GM.N) and Ford Motor (F.N).

"I never expected the crisis to spread this fast and leave this deep a scar," Toyota President Katsuaki Watanabe told reporters at a Tokyo event hosted by Japan's top business lobbies.

Toyota had already announced a three-day production halt for this month at its 12 directly operated Japanese plants -- four car assembly plants and eight for engines, transmissions and other components.

A sweeping suspension of domestic production is almost unprecedented. In 1993, Toyota halted output for one day as a strong yen hammered sales.

Japanese-built cars make up around 40 percent of Toyota's sales in the United States, where foreign-made cars and trucks have been piling up at ports and dealers' yards.

Automakers everywhere are cutting back production as consumers, hit by tight credit, shy away from big-ticket purchases even as companies dangle generous sales incentives.

Domestic rivals Honda Motor Co (7267.T) and Nissan Motor Co (7201.T) have both cut output plans by at least 200,000 vehicles for the year to end-March, and analysts expect further adjustments in January-March.

Toyota does not disclose the number of vehicles affected by production stoppages. Together, the four Japanese assembly plants built an average 130,000 vehicles a month in 2007, according to latest available data. Toyota plans to turn the 11 days in February and March into paid company holiday, a spokesman said.


Toyota warned two weeks ago it would post a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen, and said it would adjust production as needed beyond January.

Analysts said the dismal U.S. sales were no surprise and the outlook for the global car industry remains tough.

"For the stock market to re-evaluate this sector, there are two prerequisites: the end of negative news flow and an outlook for a return to the black in the next business year," Merrill Lynch auto analyst Koichi Sugimoto wrote in a client note.

"In that respect, we'd have to say the (U.S. sales) results were disappointing."

Toyota shares rose 1.3 percent on Tuesday, however, outperforming the broader market (.N225), as exporters rallied on a softer yen.

With virtually all markets weakening, Toyota said it would suspend operations at the 12 plants for six days next month and another five days in March.

On Monday, data showed Toyota's Japan sales slid 18 percent in December, and were down 7.4 percent for 2008.

But auto industry executives have warned of a difficult and unpredictable 2009.

"I'd like to believe that we'll hit bottom (for the U.S. economy) some time this year," Toyota's Watanabe said. "But if you look at the automobile market now, it's very, very tough. We need to proceed with the assumption that this situation could continue."

Watanabe said last month Toyota would aim to rationalise global operations to create a cost structure that would generate profits from parent-only vehicle sales of 7 million units, about 1 million fewer than it sold last year.

The slump in demand for cars has had a swift and damaging knock-on effect on auto parts makers.

The Nikkei financial daily reported on Tuesday that Bridgestone Corp (5108.T), Japan's top tire maker, expects its calendar 2009 operating profit to fall 15 percent to about 100 billion yen ($1.07 billion).

Last month, Bridgestone lowered its 2008 operating profit estimate to 118 billion yen from 155 billion yen. It will report financial results for 2008 on February 19.

(Additional reporting by Taiga Uranaka)

(Editing by Ian Geoghegan)

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If Toyota were doing true lean manufacturing, they wouldn't have to order production halts, it would just be part of the process when sales/orders drop. Instead they have been doing exactly what lean says not to do - producing to forecasts, which has resulted in overproduction & massive amounts of inventory. Toyota is not everything it's cracked up to be.

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well they should not hang their entire hat on US consumers. don't they build any cars Japanese want to buy?

why can't they build a better car than hyundai?

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