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Toyota is halting production at most of its domestic plants over an additional 11 days in February and March, highlighting the impact of the relentless decline in global demand for cars.
Japan’s largest carmaker, which has been a benchmark for quality and efficiency, said it was cutting 18 shifts over 11 days, or the equivalent of nine days’ worth of production at all 12 of its domestic facilities.
The cuts, which come on top of three days of production stoppages this month, would affect most of Toyota’s models made in Japan – excluding those outsourced to subcontractors, the company said.
The production halt comes as Japanese car sales, including mini-vehicles with engine sizes of 660cc or less, last year dropped 5.1 per cent to 5.08m, according to the Japan Automobile Manufacturers’ Association. This was just 65 per cent of sales in 1990, which hit a peak of 7.78m units.
Toyota’s decision to cut production further underscores the pain being felt across the global automotive industry, which has seen sales plunge in key markets, such as the US and Europe.
The world’s leading automakers are all reeling in the face of the most severe downturn in decades, which saw new car sales in the US plunge more than 35 per cent in December.
The US government has stepped in to provide $17.4bn in emergency loans to General Motors and Chrysler.
Toyota saw US sales drop 37 per cent last month, making it the worst monthly performer after Chrysler, which suffered a 53 per cent drop.
This is the first time in 13 years that Toyota has suffered a downturn in the US, its biggest market.
Honda and Nissan also saw US sales fall more than 30 per cent in December.
As a result of the global plunge in demand, Toyota – which had been expected to become the first carmaker to hit the 10m sales mark globally – cut its sales estimate for the year to 7.54m units, or 15 per cent below last year’s volume.
The group is forecasting its first operating loss in 71 years, of Y150bn ($1.59bn), compared with an earlier estimate of Y600bn in operating profits.
Japanese carmakers have been doubly hit by the high yen, which has surged against the US dollar, making their exports more expensive and slashing the profits they make in the world’s largest car market.
In addition to production cuts, Japanese carmakers have been cutting contract jobs by the thousands in what is an unprecedented move in order to help alleviate the impact of the global downturn.
financialtimes.com
