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Toyota scales back U.S. output as recall hits sales

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Toyota scales back U.S. output as recall hits sales

Lindsay Chappell

Automotive News -- February 16, 2010 - 10:41 am ET

UPDATED: 2/16/10 1:39 p.m. ET

Toyota Motor Corp. is switching from factory overtime to factory shutdowns because of the disruption in retail sales caused by its January safety recall.

The automaker today said it would stop Tundra pickup production in San Antonio the weeks of March 15 and April 12.

Toyota also will stop production of the Camry and Avalon sedans and the Venza crossover at its Georgetown, Ky., plant on Friday, Feb. 26. Toyota is considering canceling three more days of production there in March and early April.

Both assembly plants had been running overtime and Saturday production in recent weeks to boost U.S. inventories as industry sales began to perk up. But the January recall of 2.3 million vehicles because of a defective accelerator pedal prompted Toyota to stop most of its North American factories for one week.

That production resumed Feb. 15, and Toyota had planned to resume overtime and Saturday production.

Mike Goss, a spokesman for Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger, Ky., said the company has now scaled back overtime and is halting production of some models as it tries to realign manufacturing and demand.

Toyota reported losing 20,000 sales in the last week of January alone after it ordered a “stop-sale” on eight core models, including the Camry.

Goss declined to say how many vehicles will be taken out of inventory by the Georgetown and San Antonio shutdowns.

“We’re adjusting production to match sales,” he said. “This is what happens when you have a stop-sale.”

Goss said plant employees would report to work during the shutdowns to participate in training exercises. San Antonio will use the downtime to install production equipment for the Tacoma pickup, scheduled to launch there this summer.

Aggressive marketing

Toyota's U.S. executives had said at the National Automobile Dealers Association convention in Florida on Monday they were planning an aggressive marketing program for March to prevent consumers switching to other brands.

The Toyota executives said most of the inventory of 131,000 vehicles involved in the recall have had their pedals repaired. By the end of February, almost all of them will be back in showrooms, they said.

JPMorgan Securities auto analyst Kohei Takahashi wrote in a report that Toyota's U.S. inventories grew in January but were not excessively high at 79 days' worth of supply.

"Although it has already restarted production of models subject to recalls in North America, such production is being undertaken in lockstep with the prevailing sales conditions," Takahashi wrote.

Earlier this month, Toyota estimated a loss of 100,000 vehicles in sales globally from the recalls for the financial year to March 31. It said it had no projections for the new year beginning in April.

In a further blow, U.S. regulators said on Monday that customers' allegations of fatalities related to unintended acceleration in Toyota vehicles had reached 34.

Toyota President Akio Toyoda and quality chief Shinichi Sasaki are scheduled to hold a briefing in Tokyo on Wednesday on the progress of the recall of the Prius for a glitch in the brakes.

Reuters contributed to this report

Read more: http://www.autonews.com/article/20100216/OEM01/100219883/1147#ixzz0fjmpyx2Q

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