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Sat, Nov 15, 2008 - Page 10 News List

Vehicle makers slow production amid weak sales

AFP AND BLOOMBERG , TOKYO AND SEOUL

Leading Japanese automaker Toyota Motor Cop is mulling production delays, while its smaller rival Nissan Motor Co is cutting output given slowing vehicle demand.

Toyota Motor Corp is considering delaying production at a new plant in the US amid dwindling sales in North America, the Nikkei Shimbun reported yesterday.

Toyota, vying with General Motors (GM) to be the world’s biggest automaker, last week said it would review expansion plans as the global financial crisis hits the auto industry hard.

The Japanese automaker is considering postponing the start of operations at a new plant in Mississippi to 2011 or later from 2010 as originally planned, the Nikkei Shimbun said, quoting unnamed sources.

Toyota declined to confirm the report in a statement, saying: “We are reviewing each of our new projects as part of our emergency plans to improve our profits, but have taken no concrete decisions yet.”

The automaker decided last year to build the Mississippi facility at a cost of US$1.3 billion, its eighth assembly plant in North America.

Toyota had originally planned to produce the Highlander sport utility vehicle at the plant, but later decided instead to produce Prius hybrids as more consumers seek fuel-efficient cars.

But fewer consumers are now buying cars of any sort, in bad news for Japanese automakers whose eco-friendly vehicles have been a worldwide hit in recent years.

Last month, Toyota said it would reopen three US factories after a three-month suspension, using them to produce exports to the Middle East and Latin America to compensate for slack US demand.

Nissan, Japan’s third-largest automaker, said it would cut domestic production by an additional 72,000 units by March because of slowing global auto demand.

Nissan will set non-operating days and slow line speed at factories in Tochigi and Kyushu, the Tokyo-based company said in a statement yesterday. It will also cut four daily shifts at the Oppama factory next month. Nissan will also slash the number of contract workers to 500 in January, compared with 2,000 last month.

Rising unemployment and tighter consumer lending are reducing demand for new vehicles worldwide, spurring Nissan to take additional measures to cut production.

Industrywide US auto sales plummeted to the lowest monthly total in more than 17 years last month. Nissan on Oct. 31 said it planned to cut global production by more than 200,000 vehicles by March 31.

Meanwhile, the South Korean unit of GM announced yesterday a two-week shutdown of its plants given slow sales and said there may be further suspensions if the market worsens.

GM Daewoo will suspend production from Dec. 22 to Jan. 4, said spokeswoman Lim Young-mi, the first such shutdown since GM took over Daewoo in 2002.

The firm said in a statement that it and all other carmakers have been hit by the global economic slowdown.

“As we review our outlook for exports and domestic volume we will adjust our production schedule in line with reduced vehicle demand,” it said.

Lim said the company would consider further suspensions “if the market situation worsens,” but added that there had been no decision on whether to delay the launch of new models.

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