Toyota may shift production to a plant outside of Japan to remain profitable

Article by Christian A., on January 20, 2011

Due to the strength of the yen, Toyota Motor Corp. may have to shift production to a plant outside of Japan in order to remain profitable. In a statement on the company's website, President Akio Toyoda said that he is reluctant about this option.

Toyota, whose domestic production is higher than the combined output of rivals Honda Motor Co., Nissan Motor Co. and Suzuki Motor Corp., wants to keep production of about 3 million vehicles a year in Japan.

Toyota expects to earn less in operating profit this fiscal year than Honda and Nissan, whose higher ratio of overseas production gives insulation against currency swings. Toyoda said that Toyota will announce its “2020 vision” in April including a medium-term business reform plan.

Yuuki Sakurai, chief executive officer and president at Fukoku Capital Management Inc., said that Toyota is moving slowly in response to the yen's rise compared with rivals and changes in the industry.

Sakurai added that while Toyota’s actions are understandable, its investors are “not happy about this.” To cut costs, global automakers are increasing manufacturing outside their home countries.

Topics: toyota, production, japan

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