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Mainichi Daily News

Toyota quickens quest to unseat GM with reported plans to boost U.S. output by 100,000

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, a national daily newspaper reported Wednesday, without citing sources.

Company representatives were not available for comment Wednesday due to a national holiday in Japan.

There are five to six candidate models for production, the paper said, with the number manufactured annually to gradually increase to 100,000 vehicles. Earlier reports have suggested that Toyota might produce hybrid vehicles at the Fuji plant.

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 $4 billion in the first nine months of the year, hit by falling sales and rising health care costs. Its share of the U.S. 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 $7 billion off its $42 billion annual bill for operations by the end of next year, including a $3 billion cut in health care 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 U.S. 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.

Toyota's partnership with Fuji is a sign of the changing fortunes.

Fuji teamed up with Toyota in October after ending a five-year tie up with GM, which sold its 20 percent in the Japanese company. Toyota, based in Toyota city in central Japan, bought at 8.7 percent stake from GM for about US$315 million to become Fuji's top shareholder.

GM's gambit with Fuji was largely deemed a flop. But access to Fuji's plants will could help Toyota boost production at a time of soaring sales, analysts say, although Fuji has only the one plant in North America, so additional capacity will be limited.

Completed in 1988, the Indiana factory was built under a joint-venture agreement between Fuji and Isuzu Motors Ltd. Fuji bought out Isuzu's share in the venture and became sole operator of the plant in 2003.

After GM's latest cost cuts, the company will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Toyota is expected to have North American capacity of about 1.81 million cars by then, up from 1.44 million vehicles last year, Toyota spokesman Dan Sieger said Monday.

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 American consumers -- Toyota Chairman Hiroshi Okuda suggested earlier this year that Toyota should raise the price of car models in the United States to level the playing field.

Toyota raised prices soon after, but denied the move was to placate U.S. automakers. (AP)

November 23, 2005

bc

From what I understand, the Isuzu plant is currently not being used at all. There are several facilities at the Indiana location - both for Subaru and Isuzu.

Toyota's largest obstacle right now is they do not have enough engines available. If they can produce more engines they can increase US production of several vehicles, like the Corolla for example.

It would take about 2 years just to design a new building and get zoning approvals. By utilizing this existing building, Toyota can retrofit the site and be productive within a years time. Of course this means more jobs as well.