Toyota Motor Corp cut production at one domestic car plant and at two affiliates' factories as part of plans by Japan's biggest automaker to rely on overseas plants for future growth, President Fujio Cho said.
Toyota's shift abroad will cut component costs and bring production closer to markets, Cho said in an interview. The expansion push will include the carmaker's luxury Lexus models, all of which are now built in Japan.
"We will try to maintain our production level at home, concentrating on increasing efficiency," Cho said.
"I don't see sales in Japan increasing" for the whole market, he said.
Toyota now produces about one third of its vehicles outside Japan compared with more than half by nearest rival, Honda Motor Co. Japan's biggest automaker said yesterday its output abroad rose 37 percent in April from a year earlier compared with no change at its domestic factories.
"Japan is a market where it might be difficult to see growth," said Ichiro Takamatsu, who helps manage Japanese yen 60 billion (US$481 million) for Cigna International Investment Advisors Co.
"For companies to grow, they have to grow outside and it's reasonable for companies to produce where they can sell."
To adjust to demand changes, the automaker reduced output at its Motomachi plant in central Japan last year, leaving only production of Prius and Estima hybrid vehicles, the company said.
Toyota also shut Kanto Auto Works Ltd. and shifted production of its Hiace vans away from affiliate Toyota Auto Body Co. The companies moved the workers to other factories and jobs.
"Exports of completed cars will also fall from Japan," said Cho, adding Toyota's domestic plants will be used mostly to defend its annual sales at home of about 3.5 million units.
Toyota shares rose as much as 0.6 percent to Japanese yen 3,510 in Tokyo. They have risen 5.1 percent so far this year.
The automaker said in December that group production, which includes Daihatsu Motor Co and Hino Motors Ltd, will top 6 million units this year, 3 percent more than last year. Of the total, output at foreign factories will rise 16 percent to 2.1 million, while production at home will shrink 3 percent to 3.9 million.
Toyota's Lexus luxury division is also included in Toyota's plans to expand overseas output as the automaker attempts to raise its global market share to the level of General Motors Corp.
Toyota now holds about 10 percent of worldwide sales and intends to increase its share to 15 percent by early next decade.
Toyota models that are made in the US bring in an average of about Japanese yen 260,000 in profit per car compared with about Japanese yen 150,000 for models made in Japan, according to estimates by Tokyo Mitsubishi Securities Co.
"The models that are made abroad give Toyota more profit and allow it to cut more costs there," said Hideaki Aonuma, an analyst at Tokyo Mitsubishi Securities.
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