Toyota Says Domestic Output to Decline This Quarter

By Kanoko Matsuyama

Jan. 24 (Bloomberg) -- Toyota Motor Corp., the world’s biggest automaker, expects domestic production to decline in February and March as it will halt factory operations for 14 days more than usual in the current quarter.

“We are reducing factory operations to trim inventory,” Hideaki Homma, a Toyota spokesman based in Tokyo, said by telephone today.

Toyota’s domestic production will probably fall about 40 percent from a year earlier in the January-March quarter and a surging Japanese currency may prompt further cuts in April, Shinya Naruse, an equities analyst at Nomura Holding Inc., said by telephone today.

“It’s cheaper to make cars overseas,” Naruse said. “Toyota may have to cut local production if the yen remains strong.”

Japan’s currency strengthened to a record 118.85 against the pound and near a seven-year high versus the euro this week, after trading at its highest to the dollar since July 1995.

Toyota may reduce its domestic output target for April by 60 percent from a year earlier to some 148,000 units, the Tokyo Shimbun newspaper reported earlier today, without saying where it obtained the information.

“A 60 percent decline for the month would be large, but it could happen,” Naruse said.

Homma said the automaker, based in the central Japan city of Toyota, usually schedules production runs a month in advance, adding it’s too early to estimate output for April.

Jobs Threatened

Tokyo Shimbun said today Toyota might be forced to change domestic staffing plans if it curtailed production to 40 percent of capacity for a full year.

“We have no plan to change our full-time payroll in Japan,” Homma said.

The Japanese carmaker yesterday said it would reduce production at U.K. plants without cutting permanent jobs, after the Nikkei newspaper reported Toyota might eliminate more than 1,000 positions in North American and Britain because of declining sales.

The carmaker, which last year passed General Motors Corp. in total sales for the first time, has trimmed output as the global recession cools car demand.

In the U.S., the world’s biggest auto market, Detroit-based GM has predicted industry sales may drop to as low as 10.5 million units this year from 2008’s 16-year-low of 13.2 million.

Toyota earlier this week said it planned no “involuntary” job cuts in North America after announcing further production cuts in the U.S. and Japan.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at at kmatsuyama2@bloomberg.net.