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Now in the black, Toyota plans production overhaul

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Now in the black, Toyota plans production overhaul

Hans Greimel

Automotive News -- May 17, 2010 - 12:01 am ET

TOKYO -- Toyota plans to overhaul global production by building factories in emerging markets and streamlining capacity in mature markets such as North America and Japan.

"In the emerging markets, where demand will grow, Toyota's sales volume increase will require capacity to be expanded locally," Atsushi Niimi, Toyota's global manufacturing boss, said here last week at the company's financial press conference.

"On the other hand, in the industrialized countries, there are structural changes of the market taking place. So we need to review the product lineup to be manufactured, and we need to be more robust against the exchange-rate fluctuation."

Compared with rivals such as Nissan Motor Co. or Honda Motor Co., Toyota exports a bigger share of the vehicles it makes in Japan and is more susceptible to changes in exchange rates.

Toyota rebounded to profit in the fiscal year that ended March 31 after its first loss in seven decades. But the company took a ¥320.0 billion (or $3.45 billion at current exchange rates) hit from the yen's climb against both the dollar and euro.

For the United States, Niimi said Toyota is targeting greater "self-reliance from development to manufacturing." Overall North American capacity fell with the closure this year of New United Motor Manufacturing Inc., Toyota's joint assembly operation with General Motors in California.

The move lopped about 400,000 units of capacity from Toyota's global total of 10 million vehicles. The plant's output of Corollas is currently being replaced by production in Japan and Cambridge, Ontario.

Speculation is increasing that Toyota's mothballed plant in Mississippi will make Corollas instead of the Prius hybrid when it opens. Toyota hasn't announced a startup date there.

Production in Japan is also in store for a shake-up. Toyota aims to trim excess capacity by combining lines and putting production of similar vehicles in the same plants, Niimi said. The company also will make lines able to produce both body-on-frame and unibody vehicles.

Separately, Toyota said aggressive cost-cutting and streamlining helped it improve its breakeven point for global production. In 2009 the company had to produce more than 8 million vehicles a year to turn a profit, estimated Senior Managing Director Takahiko Ichiji. Last year, that figure fell to around 7 million, he said.

Toyota built 7.56 million vehicles worldwide in the fiscal year that ended March 31, 2009, and racked up a loss. A year later it made just 7.28 million and chalked up a profit.

Toyota reported net income of ¥209.4 billion ($2.26 billion) and operating profit of ¥147.5 billion ($1.59 billion) in the year that ended March 31, reversing losses from the year before and beating the company's forecast.

The outlook for the current fiscal year is even brighter. Operating profit is seen nearly doubling to ¥280.0 billion ($3.02 billion), while net income is expected to climb 48 percent to ¥310.0 billion ($3.35 billion).

Read more: http://www.autonews.com/article/20100517/OEM01/305179989/1424#ixzz0oBtts9z4

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