Toyota Overhauling U.S. Vehicle Manufacturing Strategy

WASHINGTON, July 20, 2009; John Crawley writing for Reuters reported that Toyota Motor Co North America is reviewing its U.S. manufacturing strategy to account for idle capacity and shifting corporate priorities, including a desire to correct internal problems magnified by the industry's worst-ever downturn.

Yoshimi Inaba, Toyota's North American president, also told reporters on Monday the unprecedented restructuring of General Motors Corp and Chrysler Group were "good for the country" and would benefit Ford Motor Co (F.N). But he saw no significant role for the Obama administration in helping Toyota return to profitability.

"We should manage our own destiny," said Inaba, a former top sales executive who recently returned to the Japanese automaker.

"We are not short of cash," he said.

Inaba said the playing field for foreign manufacturers should be level and would not rule out Toyota applying at some point for Energy Department advanced technology loans. The $25 billion program was established last year mainly to help U.S. automakers make more fuel efficient vehicles but overseas manufacturers can also apply, if they meet certain criteria.

Ford and Nissan have received loans, while GM and Chrysler have not.

Toyota is a global leader in gasoline/electric hybrid design with its popular Prius.

With profits this year swamped by the recession-fueled sales downturn as Toyota's U.S. sales slid 32 percent in June, Inaba said Toyota has "good reason" to be optimistic about next year.

Inaba sees signs of improvement and expects overall industry U.S. sales to grow from just under 10 million units annually now to between 11 and 13 million units over the next year.

The United States has been Toyota's biggest and most profitable market until recently.

Inaba offered little visibility on the fate of Toyota's Fremont, California, plant and production plans for its half-built Mississippi factory where the company has postponed plans to build the Prius due to industry uncertainty.

Inaba said Toyota has yet to receive a concrete proposal from California state officials for the Fremont facility, which employs 5,000 people and has been part of the New United Motor Manufacturing Inc joint venture with GM that the U.S. automaker has decided to end.

While market conditions and product viability are crucial, Inaba said Toyota would not let questions about California and Mississippi linger. Swifter decision making is a priority under a new management mind-set giving regions greater autonomy for taking action.

The shift in approach also aims to address a series of problems in North America, some of them rooted in self-satisfaction as Toyota's stature rose over the years. Cracks appeared as sales began to plunge and Toyota struggled to respond to changing demand.

"We could have been smarter," Inaba said.

He said Toyota now plans to listen to consumers and dealers more carefully on products as part of the back-to-basics strategy. Investors agree that Toyota had stretched itself too far and too fast in recent years.

Additional reporting for Reuters by Chang-Ran Kim; Editing by Andre Grenon, Phil Berlowitz