- The Washington Times - Sunday, September 17, 2006

TOKYO

Toyota Motor Corp. is quickening its quest to unseat ailing rival General Motors Corp. as the world’s biggest automaker and widen its lead over Ford Motor Co. with reported plans to boost overseas production and blueprints for higher output in North America.

Ford recently announced drastic steps to remold into a smaller, more competitive company, slashing thousands of jobs and shuttering two plants to cut costs. DaimlerChrysler said it would cut U.S. production through the rest of the year, and GM announced big cutbacks earlier this year.

Toyota, by contrast, is planning to increase overseas production by 40 percent of its 2005 level to 5 million vehicles by 2008, Japan’s Nihon Keizai newspaper reported yesterday, without saying how it obtained the information.

In North America, the world’s largest auto market, the Japanese company intends to raise production by 20 percent to 1.84 million vehicles in that period, the business newspaper reported. Toyota aims to meet the target with the help of new plants previously planned for Texas and Canada, it said.

The vastly different outlooks underscore the diverging fates of Japanese and American automakers. While U.S. competitors are closing plants, laying off workers and trimming production in response to weak sales, Japanese manufacturers, including Toyota and Honda Motor Co., are posting record earnings and cranking output to keep up with demand.

In May, profit-rich Honda announced sweeping plans to spend $1.18 billion on new plants in the United States, Canada and Japan, and boost production to meet soaring sales of fuel-efficient models.

Nissan Motor Co., meanwhile, is in talks with Renault SA for an alliance with GM to help bail out their Detroit rival.

Under the plans reported yesterday, Toyota also expects to raise production for the first time above 1 million vehicles in Asia, excluding Japan and China. That goal will be achieved by bringing online its third factory in Thailand, the Nihon Keizai reported.

In China, the automaker aims to quadruple production from 2005 levels to 600,000, it said.

Domestic production will rise to 4.15 million vehicles by 2008, bringing Toyota’s global output to 9.1 million.

Toyota officials were not available for comment yesterday. Toyota’s robust earnings and sales have put it on track to surpass General Motors as the world’s No. 1 automaker, analysts say. The only question is when.

GM, which lost $10.6 billion last year, began a major restructuring in November that called for closing 12 plants by 2008, slashing its work force, reducing capacity and cutting costs. About 34,000 hourly workers have accepted buyouts or early retirement offers that were extended earlier this year, and the company cut 2,000 salaried workers.

According to figures released by GM earlier this month, the American automaker produced 9.05 million cars worldwide last year. Toyota produced 8.23 million worldwide.

Since being overtaken by Toyota in 2003, Ford is falling further behind.

Cuts by Ford on Friday bring its total plant closures to 16, adding to 14 plants announced in a previous restructuring. Ford also said it would complete cuts of about 30,000 hourly jobs by the end of 2008, four years ahead of its previous target.

That announcement coincided with more bad news from DaimlerChrysler, which said Friday that its Chrysler division will make more production cuts in the third and fourth quarters to reduce dealer inventories.

The Big Three, which rely more on light trucks for profits than their foreign competitors, have been hurt by declining sales of pickup trucks as customers switch to more fuel-efficient vehicles. They are also struggling with the need to reduce so-called “legacy costs” of big pay and benefits packages for workers and retirees.

Despite its ambitious outlook, however, even Toyota recognizes no automaker is invincible.

Last month, Toyota President Katsuaki Watanabe warned that his company could delay some new models as it tries to improve its quality control after a spate of recalls. The glitches were partly because of efforts to cut costs by using the same parts across different models, but could do lasting damage to Toyota’s reputation for reliability.

Japanese authorities have begun an investigation into three Toyota officials suspected of failing to do anything about a faulty steering part, which may have caused a 2004 accident that injured five persons.

The U.S. government also has opened an investigation of 2004-05 Toyota Sienna minivans after receiving complaints that the liftgate had failed, causing the hatchback to close on motorists.

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