Toyota to make Prius, not SUV, at new US plantToyota Motor Corp will switch gears and produce the Prius hybrid instead of the less fuel-efficient Highlander sport utility vehicle at its planned Mississippi factory, the Nikkei business daily reported on Thursday.
The world’s biggest automaker is also likely to suspend production at one of two assembly lines at its Indiana factory, where it builds the Tundra pickup and Sequoia SUV, by year-end for at least six months, the paper said. Citing company sources, it said the move was in response to falling demand for those models and would amount to a production cut of 50,000 vehicles a year.
During the stoppage, Toyota will modify the line to allow for more flexibility to build other models, the paper said in its evening edition.
The change in plans may mean the Mississippi factory, which will churn out the Prius as well as other cars, will not come onstream until 2011, the Nikkei said, at least a year behind original plans.
A Toyota spokesman said the company could not comment on the report. A source familiar with the matter said an announcement regarding North American manufacturing operations could come as early as Thursday in the United States.
Hit by an industry-wide slump in sales of large, gas-guzzling vehicles due to soaring fuel prices, Toyota’s sales in the United States, its single-biggest market, have fallen 6 percent so far this year. Its sales of light trucks such as SUVs and pickups are down 12.5 percent, forcing it to run its Indiana and Texas light-truck factories at a reduced pace indefinitely.
In contrast, Toyota is struggling to keep up with runaway demand for the gasoline-electric Prius model, which saves fuel by capturing energy lost during braking to power an electric motor. [ID:nN01279173]
At the end of June, Toyota had a one-day supply of the Prius hybrid, imported from Japan, and a 2-½ day supply of its hybrid Camry sedan assembled at its Kentucky plant.
“All in all, it would be a positive step in the midst of this hellish situation,” UBS auto analyst Tatsuo Yoshida said, referring to the worse-than-expected slump in the U.S. market this year.
“It shouldn’t affect their capital expenditure plans too much either,” he added.
Sales of the Prius, the world’s most popular hybrid car, fell 26 percent in the United States as dealers ran short of inventory and customers faced a six-month waiting list. Toyota said it would only partly be able to satisfy the backlog of demand from Japan this year due to a shortage of battery supply.
Toyota has already delayed by at least five months the start of production at the Mississippi plant to May 2010. It had planned to start at a production volume of 120,000 vehicles, just 80 percent of capacity. The Highlander, a crossover-type SUV sharing a platform with the Camry, is now imported from Japan.
Hoping to tap the lucrative large pickup truck segment, Toyota opened a factory to build up to 200,000 Tundra pickups a year in San Antonio, Texas, in 2006. Last year, production fell far short of capacity, at 139,000 units.
The U.S. Big Three, General Motors Corp and Chrysler LLC have also been forced to suspend or close some factories in North America due to slack demand.
Toyota said last month it would start assembling a small number of Camry hybrid cars in Thailand and Australia over the next two years. Apart from Japan and the United States, Toyota also assembles a small number of Prius cars at a joint venture plant in China.
(Reporting by Chang-Ran Kim; Editing by Sophie Hardach)
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