Toyota to slash world production capacity

TOKYO: Japan's Toyota Motor Corp., seeking to recover from its first year in the red, plans to slash its global production capacity by up to 10 percent to cope with weak sales, reports said Wednesday.

Toyota will cut its output capacity by one million vehicles from the current level of 10 million, the Nikkei business daily said, while public broadcaster NHK reported that the reduction would amount to 700,000 vehicles.

A Toyota spokeswoman confirmed the company plans to suspend from early 2010 until late 2011 a line at its Takaoka plant in Aichi prefecture that can produce 220,000 vehicles a year, but said no other cuts had been decided.

Toyota will reduce its capacity by shutting down a US joint venture with General Motors Co. and by halting some production lines at factories in Britain and Japan, the reports said.

Toyota will soon announce a decision to shut down the California joint venture, New United Motor Manufacturing Inc. (NUMMI), which produces cars such as the Corolla compact and the Tacoma pick-up truck, they said.

Closing NUMMI will reduce output capacity by 300,000 vehicles a year, while a further cut of 200,000 will come from halting one of two lines at a plant in Derbyshire, Britain, that produces mainly Auris cars, the reports said.

Toyota's domestic capacity will also be reduced by shutting down some production lines at major factories in Toyota's home base of Aichi prefecture in central Japan, it said.

The carmaker will idle the affected production lines in Japan and Britain so that it can quickly raise production in the event of a recovery in demand, the Nikkei said.

It will also avoid job cuts in the two countries by dispatching workers to other plants or putting them on training courses, it said.

Toyota, which overtook US rival GM in 2008 as the world's largest automaker, is enjoying brisk sales of its remodelled Prius hybrid, but overall demand is still well below levels seen before the economic crisis began.

Earlier this month the automaker announced a smaller-than-expected first-quarter loss and said its shortfall for the full financial year to March would be narrower than previously anticipated.

GM said in June it would drop its ownership stake in NUMMI as it restructures its ailing operations.