Toyota may expand production outside Japan as the yen gets stronger

Article by Christian Andrei, on October 11, 2011

Toyota Motor Corp.’s earnings are dropping as the yen gets stronger, pushing the automaker to expand production outside Japan. Chief Financial Officer Satoshi Ozawa said this is a difficult time for the company. Toyota will have to cut production costs to compensate for the currency problem. He said that the company may even have to transfer shifting manufacturing from Japan "to some extent."

The export earnings of Toyota and its Japanese rivals are falling due to the euro’s decline since April to its lowest point in a decade.

Last Oct. 6, Carlos Ghosn, CEO of Nissan Motor Co., said that Japan may experience a “hollowing out” of its industrial base if the government fails to take steps to control the yen. Toyota’s Web site states that its production locations located outside of Japan at the end of March included 50 sites in 26 countries and regions.

Toyota is hiring over 100 people at its European regional headquarters in Brussels for research and development, sales and administration, says Autonews. Ozawa visited the plant in Ovar for its 40th anniversary and to witness the rolling out of the 100,000th Dyna truck. The Hiace van is also produced in this factory.

Toyota has long been a success when it comes to the European market. With the release of the third generation Yaris, the company hopes to continue this accomplishment. The Yaris itself, for at least 10 years, has managed to enjoy a market share not going below 5%.

In fact, a large part of the company’s sales for the European market has been attributed to the Yaris and it continues to enhance the image of the brand becoming an important pillar in its manufacturing operations in Europe. For the last couple of years, the B-segment has experienced faster fragmentation owing mainly to the increasing diversity in the new types like the B-MPV and SUV. Even then, 50% of total sales continue to be accounted for by the hatchback, making this bodystyle its best-seller.

As fuel costs continue to go up together with the rise in the levels of CO2 taxation due to downsizing of consumer from the other classes, sales under the B-segment are expected to continue being stable in the near future.

The new Yaris will remain to be part of this segment as it has managed to grab a market share of 26%. This comprises sales of about 4 million units per year. In addition, the B-segment continues to be the most important within the automotive market in Europe. As it stands now, two thirds of the vehicles in the B-segment are powered by petrol engines. The previous Yaris was celebrated for its roominess, versatility, and durability.

It was also cited for its ease when driving in an urban setting, and the efficiency of the engine. This latest version still has all the advantages present in the previous generation but it is more dynamic and has a more sophisticated design.

The sensor quality is clearly on a higher level with multi-media connectivity delivering a breakthrough in its class. The powertrain of the new Yaris is efficient with an advanced transmission, and it even has enhanced agility. As expected, the Yaris will point to quality as its main focus. While it does have built-in quality that was recognized in a 2011 TüV report in Germany, Toyota Motor Manufacturing France made sure to involve suppliers even at the start to guarantee that each of the components help with the vehicle’s overall quality.

Topics: toyota, japan, production

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