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Toyota Plans No New Plant Construction Until 2016, Nikkei Says

January 06, 2013

Toyota Plans No New Plant Construction Until 2016, Nikkei Says

Toyota Motor Corp., Asia’s biggest carmaker intends to focus on getting more out of the money it spends on growth, Keisuke Kirimoto, a spokesman for the automaker said today by phone. Photographer: Peter Foley/Bloomberg

Toyota Motor Corp. (7203) plans no new factory construction for three years as it focuses capital investments on existing plants, Nikkei reported today, without saying where it got the information.

Toyota wasn’t the source of the information in the report, Masami Doi, a spokesman for the Toyota City, Japan-based carmaker, said by phone today, declining to comment further. New construction would not begin until after April 2016, except for facilities already announced for Indonesia and Thailand set to begin operations this year, according to the report.

Asia’s biggest carmaker intends to focus on getting more out of the money it spends on growth, Keisuke Kirimoto, a spokesman for the automaker said today by phone. Toyota is also sharing facilities with some competitors, including contracting to produce as many as 50,000 cars a year at Mazda Motor Corp. (7261)’s planned Salamanca, Mexico, plant.

“I cannot discuss our business plans, but we consider it important to boost investment efficiency to secure medium-to- long-term growth,” Kirimoto said.

The new investment policy will be announced this spring in Japan as part of the company’s global management plan, according to the Nikkei report.

Toyota said Nov. 10 it would more than double vehicle production capacity and build a new engine factory in Indonesia to meet rising demand in the Southeast Asian country.

Brazil Expansion

In August, the carmaker announced plans to build an engine factory in Brazil to cater to increasing demand in the world’s fourth-biggest auto market. The Nikkei report didn’t say whether that plant would be affected by the new investment policy and Toyota declined to comment. The 1 billion reais ($492 million) Sao Paulo facility should begin production by the second half of 2015, Chief Executive Officer Akio Toyoda told reporters on Aug. 8.

The carmaker announced plans last year to boost vehicle and engine output at existing plants in the U.S. and Canada and to increase purchases of North American parts and materials.

Chief Executive Officer Akio Toyoda has also pledged the company founded by his grandfather would keep 3 million units of plant capacity in Japan, a higher portion of its global production than Nissan Motor Co. (7201) and Honda Motor Co.

The decision reflects Toyota’s efforts to re-establish its quality reputation, said Kevin Tynan, an automotive analyst at Bloomberg Industries.

Quality Control

“Toyota isn’t chasing short-term profitability,” he said. “They’ve made a conscious decision not to move quickly to set up factories in low-cost production countries like Mexico. It’s more important to them to keep tight control of quality over the long term.”

The carmaker, operating about 50 factories outside Japan and 30 in the country, will install more efficient equipment at its factories to increase output, according to the Nikkei report.

Traffic at dealerships in China is recovering to levels seen before an anti-Japanese boycott and violent demonstrations erupted last year over islands both countries claim in the South China Sea, Reuters reported today, citing a company executive it didn’t identify. Toyota sold almost 90,000 cars in the country in December, compared with 108,000 a year earlier, and will announce sales for the month Jan. 7, according to the report.

To contact the reporter on this story: Dan Hart in Washington at dahart@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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