A top Toyota executive has said the automaker won’t build any new factories for at least two more years.
According to a Wall Street Journal report, Nobuyori Kodaira, Toyota’s executive vice president, said the company would heed lessons learned during the global financial crisis, which began in 2007, when it struggled for several years with overcapacity before demand recovered.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Though the general outlook for capital spending by Japanese companies looks robust this year, Toyota plans to hold the line despite capacity constraints, Kodaira was cited as saying on Tuesday (27 May). Instead the company is asking workers for creative solutions to lifting output at existing facilities.
“Building a new plant is a rather simple solution because people with money can do it,” Kodaira told journalists at a briefing in Tokyo. “But not building new plants can stimulate wisdom and new thoughts.”
The WSJ noted Toyota earlier this month predicted its vehicle sales this fiscal year ending 31 March 2015 would rise by a further 117,000 from 10.13m in financial 2013/14. Company executives had outlined confident sales forecasts for China and other fast-growing economies.
Toyota’s ability to find the needed capacity has been queried after it said earlier this month that affiliate Fuji Heavy would stop producing the Camry under contract at its plant in Lafayette, Indiana in 2016. Fuji makes 100,000 units a year at the plant for Toyota’s US unit but the company plans now to increase output of its own Subaru models there.
Toyota has said the Indiana Camry production would be absorbed by the factory in Georgetown, Kentucky but the WSJ noted that plant has already been producing at maximum capacity and is expected to add production of the Lexus ES sedan as well.
Toyota’s plant in Indiana recently took on production transferred from Japan of the redesigned Highlander for both domestic supply and export to some marketsincluding RHD versions for Australia.
According to the Journal, Kodaira said Toyota was concerned about problems in developing countries, and not just Thailand, where months of political turmoil had already sharply reduced car sales before a military coup last week. He said elections in other Asian countries in the coming months could result in additional uncertainty in the near term.
Citing “a lack of transparency in demand trends,” Kodaira said: “Our policy is that until 2016 we will not build a new plant. Specific consideration of new plants has not begun.”
He added, however, that the company did not want to get caught unexpectedly by rising demand, saying that, if the company saw a need, it would “study” the possibility of new plants before 2016 so that it could approve them quickly in that year if it needed to do so.
