Toyota to Cut Production

Still confronted with declining volumes, Japanese manufacturer Toyota is said to plan a massive 700,000 vehicle global production capacity to align itself to new economic demands. According to the Nikkei business daily, quoting the infamous "sources close to the matter", Toyota plans to cut its production capacity by some 10 percent (1 million vehicles) as soon as the end of the 2009 financial year (March 2010).

"The production cut is positive for its earnings, but there is room for further capacity cuts in the United States and elsewhere," Yoshifumi Tabei, an auto analyst at Kazaka Securities was quoted as saying by Autonews. .

So far, Toyota's sales have been boosted by scrappage incentives set up around the world, but with most of them nearing demise, most fear last month's boom will come back and haunt manufacturers with volumes even lower than those prior to the incentives.

In the US alone Toyota led the way as the most desired brand under the successful Car Allowance Rebate System (CARS). Yet, this has not changed the grim prospects the Japanese manufacturer is facing. The company predicted a milder loss this year, but not because of the boost of sales, but mostly because of cost cuts.

The Japanese have not yet confirmed any plans to reduce their annual global output to 9 million vehicles. According to the source quoted by Nikkei, the company is looking into the matter, but is yet to decide if and when to apply such cuts. Still, the source claims Toyota decided to close a line in Japan and one in the UK for about a year and a half starting next spring.