Toyota to increase global production: plans to produce 8.9 million units in 2012

Three group companies merge in the Tohoku area and will build an engine production line with...

2011/08/26

Summary

 Below is an outline of Toyota's plans to increase global production between September 2011 and 2012, to enhance overseas production capacities and to raise the efficiency of its domestic production activities.

 Toyota will increase its production significantly starting in September 2011 on the grounds that its supply network is recovering from the impact of the great earthquake earlier than once anticipated. Toyota announced on August 2 that the company was set to produce 7.72 million units of Toyota and Lexus cars in fiscal 2011 or 380,000 units more than the total produced in fiscal 2010. In addition, Toyota reportedly has finalized a plan to produce a record-high quantity of 8.9 million units in 2012 (calendar year) and communicated with its parts suppliers accordingly. This represents Toyota's intention to recapture the market share in the United States and China that it lost as a result of decreased production.

 Toyota follows a policy to raise the ratio of sales in emerging countries in the global market from 40% in 2010 to 50% in 2015, and will increase production capacities in overseas countries, especially in fast growing countries. To meet that goal, Toyota will increase the annual capacity in Thailand and Argentina combined by 100,000 units in the fall of 2011. The new Changchun Plant, China, will start production, and the New Mississippi Plant will start operating in the first half of 2012. Toyota will thus increase its overseas annual capacity by 480,000 vehicles from 2011 to the end of 2012, and by 820,000 vehicles by the end of 2013.

 In July 2011, Toyota announced plans, regarding production facilities in Japan, to convert Toyota Auto Body and Kanto Auto Works to its wholly-owned subsidiaries, and a possible merger and integration of three of its group companies, namely Toyota Motor Tohoku Corporation, Kanto Auto Works, and Central Motor Co., Ltd. These decisions are aimed at streamlining the production network among the group companies to increase efficiency in production by promoting coordination toward more consolidated management, thereby contributing to maintaining the domestic production quantity at three million units. A high-efficiency production line was installed in Central Motor's New Miyagi Plant that will cut the investment by 40% and reduce manufacturing costs by 6%. Toyota will also introduce a small-scale, high-efficiency engine production line that will pay off at an annual capacity of 100,000 units.

 Toyota intends to keep its domestic production quantity at three million vehicles through a series of these cost-reducing efforts. It must be noted, however, the high appreciation of yen in excess of 80 yen to the dollar is presenting a problem that cannot be removed by steady cost reducing efforts and, hence, Toyota will seek the greater use of imported parts and increased local contents in its overseas production.