Tadashi Arashima is happy with the automaker’s production capacity across Europe for the foreseeable future but sees challenges ahead in the west, he told just-auto on the sidelines of a media event at the automaker’s Polish diesel engine plant on Thursday.
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“At the moment our capacity in Europe is almost 800,000 units and, [with the Camry assembly plant in Russia] close to 900,000 units, we feel this is a good number for us to achieve the 1.2m in sales,” he said, referring to Toyota’s current stated target to be achieved by 2010.
“If [sales] are higher in the future, then we have to think about it,” Arashima added.
He added that Toyota, which has a long-standing policy of building cars where it sells them, would not build every model it sells in Europe here.
“We sell only 30,000 Land Cruisers in Europe and it doesn’t make any sense to build it here. In Japan we have a plant that makes 200,000 so that is much more efficient.”
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By GlobalDataHe noted that RAV4 volume was 100,000 units for Europe a year but said there was sufficient capacity in Japan and that European production was just part of output for large global markets such as Japan and the US.
“So there really is no need for us to build that in Europe, either.”
He indicated that the new Russian Camry plant, though beginning as a “fairly simple” complete-knockdown” (CKD) assembly operation – which usually means local welding and painting using imported body panels, and final assembly using imported completed engines and major mechanical components – would later become a more self-contained manufacturing plant.
“This will be a step-by-step approach,” Arashima said.
Grilled on the future of western and UK plants by UK-based journalists who have recently reported the demise of MG Rover, the planned closure of PSA Ryton, the sale of van maker LDV to foreign interests and the possible closure of GM’s Ellesmere Port plant, Arashima was coy.
Asked where in Europe Toyota might site its next plant, he answered only, after a pause: “Well, it is very difficult to say at this moment.
“It is not just cost of labour or anything. It is a much more complicated process, depending on what models we think we can sell more of.” That was the reason the Avensis and Corolla were currently being built in the UK, the Corolla Verson in Turkey and the Yaris in France.
Asked why the UK plant in Burnaston had been expanded recently as other manufacturers contract UK operations, Arashima said he couldn’t comment on the rival automakers but noted: “Once we commit, we are committed.”
He said Australia was a good example where some global automakers (such as Nissan) closed factories [in the 1990s] once tariffs on imported cars were reduced “significantly”.
“Toyota, on the other hand, expanded [developing left-hand-drive Camry exports to the Middle East] because we were committed to this market and we had thousands of employees,” Arashima said.
The company also displayed similar form in neighbouring New Zealand. Though forced, after 30 years, out of low-volume CKD assembly by a combination of unlimited used car imports and reduced and ultimately eliminated tariffs, it began importing used cars itself, turning its former assembly plant into a vehicle processing centre, and saving some jobs in the process.
“UK is the same thing,” Arashima said. “We know everyone is going out but we are committed so it is our task to reduce costs as much as possible and increase operational efficiency as much as possible. It is difficult but we have to find some way to make it survive.”
Arashima declined to comment on recent union claims that the days of volume car making in the UK were numbered and that there would be no further substantial investment by foreign companies.
“I don’t think I would be in a position to comment,” he said.
He said that he was happy with this year’s sales growth across Europe of 7-8%.
“The western European market is probably fairly saturated but things like CO2 emissions issues and changes in people’s preferences to more MPVs [minivans] and SUVs – those kind of structural changes will come so this is not a very static market.
“There’s a number of opportunities and we have to address those changes in customer preferences or we’ll be way behind.
“I think we’ll have to be very careful monitoring those western customers’ preferences and where those cars are actually being built.
“It’s a huge task for us.”
Graeme Roberts
