Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, reduced production last month as rising unemployment in the U.S. has hammered car sales.
Toyota’s output dropped 39 percent to 442,621 vehicles in May from a year earlier, the company said in an e-mailed release today. The decline is the company’s 10th straight. Honda, the country’s second-biggest carmaker, cut global production by 38 percent to 195,085 units, it said. Nissan’s global output fell 27 percent.
Japanese automakers slashed production in North America last month to reduce inventories as overall sales in the U.S. plunged 34 percent. Sliding demand in the U.S. has led Nissan Motor Co. to cut 20,000 jobs this fiscal year and pushed General Motors Corp. and Chrysler LLC into bankruptcy.
“Recovery will come only after the U.S. returns to health because Japanese carmakers rely on that market,” said Masatoshi Nishimoto, an analyst at CSM Worldwide in Tokyo.
CSM predicts sales in the U.S. will fall to 9.7 million units this year from 13.2 million a year ago and then rise to 11 million in 2010. The jobless rate in the world’s largest economy jumped to 9.4 percent in May, the highest in more than 25 years.
The Japan Automobile Manufacturers Association said June 18 that domestic sales are lagging behind its forecast for the fiscal year, already expected to be the worst in three decades. The group predicts Japan industrywide sales will drop 8.5 percent to 4.3 million in the year ending March.
Toyota’s production in Japan fell 42 percent to 192,637 in May and exports dropped 51 percent, the company said. That doesn’t include its Hino and Daihatsu units.
Honda built 52,663 vehicles domestically, down 43 percent, the company said. Its exports slumped by 65 percent to 18,156 vehicles. Total production at Nissan fell to 201,340 vehicles, while domestic output fell 36 percent and exports fell 56 percent, it said in a statement.
Honda rose 3.3 percent to 2,650 yen as of 1:45 p.m. on the Tokyo Stock Exchange. Toyota gained 2.5 percent to 3,710 yen. Nissan rose 3.5 percent to 590 yen.
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Toyota Slashing Costs
The automaker is slashing costs by at least 800 billion yen this year as it expects global sales to plummet by 1.07 million vehicles to 6.5 million units this fiscal year.
Toyoda said today he hopes to cut beyond that target calling the goal “only a starting line.” He added that his salary will be reduced by 30 percent for one year and board members will also return part of their salaries.
Toyota is likely to begin cutting costs in Japan first, analysts said. Toyoda may slash the automaker’s domestic capacity and workforce by at least 10 percent, reducing its 20 platforms and 70 model types by 10 percent and consolidating its rural dealer network in Japan, according to Koji Endo, an analyst at Credit Suisse Securities (Japan) Ltd.
Prius
Toyota, which introduced a new version of its Prius hybrid on May 18, is reviewing its product line up to focus on regional offerings, Toyoda said.
Toyota will form a market research, planning and advertising unit that will report to Toyoda. The unit, which will merge existing departments, will be formed in January.
Toyota said it has now booked 200,000 domestic orders for the new Prius gasoline-electric hybrid.
The company had set a sales target of 10,000 units a month in Japan. The tally includes 80,000 orders placed before the car went on sale.
The third-generation Prius was Japan’s bestselling car last month, surpassing Honda Motor Co.’s Insight. Hybrid sales have surged on the introduction of new models and government incentives.
Source: Bloomberg
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