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Toyota ramping up production in bid to unseat GM

Toyota Motor Corp is quickening its quest to unseat ailing rival General Motors Corp as the world's biggest automaker with reported plans to start manufacturing up to 100,000 Toyota vehicles at a Subaru factory in Indiana.

Word of Toyota's ramped-up production schedule comes just days after money-losing GM said it will close 12 facilities by 2008 in a move that will slash the number of vehicles it is able to build in North America by about 1 million a year.

The combined developments could help Toyota surpass GM in worldwide production, although it's unclear if that could happen because Detroit-based GM is growing rapidly in Asia.

Toyota expects to produce 8.1 million vehicles this year, while GM expects 9 million, according to Greg Gardner of Harbour Consulting, a manufacturing consulting firm.

Chipping away at GM's lead will also be a new Toyota pickup truck plant scheduled to open next year in San Antonio, Texas, that will add an additional 200,000 vehicles to Toyota's annual capacity. The Japanese company's output will be boosted by another 100,000 vehicles in 2008, when Toyota's new RAV 4 plant comes online in Canada.

Under the latest expansion plans, the world's No. 2 automaker has asked Fuji Heavy Industries, maker of Subaru autos, to start building Toyotas in 2007 at a Lafayette, Indiana, factory operated by Fuji's wholly-owned subsidiary Subaru of Indiana Automotive, the Asahi newspaper reported yesterday, without citing sources.

Company representatives were not available for comment yesterday because of a national holiday in Japan.

The Indiana plant produced nearly 120,000 Subaru models last year. It wasn't immediately clear if Subaru production would be reduced or what the factory's total vehicle output would be.

GM lost almost US$4 billion in the first nine months of the year, hit by falling sales and rising health care costs. Its share of the US market has shrunk to 26.2 percent from 33 percent a decade ago.

The plant closings, which will entail 30,000 job cuts, are meant to chop US$7 billion off its US$42 billion annual bill for operations by the end of next year, including a US$3 billion cut in healt hcare costs. Toyota, by contrast, is on pace to set a fourth straight year of record profits.

Both GM and Ford Motor Co, the world's third-biggest automaker, are seeing their US market share dwindle at the expense of Toyota and other Asian competitors. Toyota, Nissan Motor Co and Honda Motor Co are all reporting healthy earnings bolstered by their reputation for well-built, fuel-efficient cars at a time of surging gas prices.

GM and Toyota have a long-standing partnership to share environmental technology, and they run a car assembly plant in California together, although the ties do not involve holding stakes in each other.

Out of concern for GM's plight -- and possibly to stave off an anti-Japanese backlash by US consumers -- Toyota chairman Hiroshi Okuda suggested earlier this year that Toyota should raise the price of car models in the US to level the playing field.

Toyota raised prices soon after, but denied the move was to placate US automakers.
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