Toyota may shift to foreign production

AFP, Saturday 15 Jan 2011

Toyota Motor considers reallocating production sites as yen appreciation puts pressure on its profits

Toyota to reduce domestic production
Toyota to reduce domestic production. (Photo: Reuters)

Toyota Motor will consider shifting factories overseas if the yen stays high and puts pressure on its profits, the company president said.

"We do not wish to relocate production sites because of currencies and foreign exchange alone," Akio Toyoda said in a Japanese-language online message dated Friday.

However, he added, "if profits cannot be generated" despite efforts towards efficient, good-quality manufacturing and training, "we have no choice but to consider relocation of production sites as a real possibility."

The company plans to release a fresh medium-term business plan in April, he added.

Japanese exporters, led by automakers and electronics producers, have come under pressure from the rising yen in recent months.

A strong yen makes Japanese exports relatively more expensive in foreign markets, while shrinking the value of Japanese firms' overseas earnings when repatriated.

Meanwhile, Japanese automakers have been shifting more of their production and sales overseas -- particularly to growing Asian markets -- as younger Japanese motorists avoid car purchases due to the high costs of fuel, maintenance and tax.

Toyota Motor had already announced in late 2010 a plan to reduce domestic production while boosting output in foreign countries in 2011.

"Unfortunately, we have to brace ourselves for more difficulty and uncertainty to come, like last year," Toyoda said in his message, adding that the business plan would outline a corporate vision for the decade to 2020.

"In April we hope to be able to show you the vision, including the directions and targets for a medium-term business structure reform plan to achieve the vision's goals," Toyoda said.

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