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Toyota To Shift Production to Texas and Ontario

NUMMI is victim of the Great Recession and ongoing losses.

by on Aug.28, 2009

A flop at sales of  units a month.

A flop at sales of 6,000 units a month.

Toyota Motor Corporation plans to transfer some Tacoma compact pickup truck production from the New United Motor Manufacturing Inc. (NUMMI) plant in California to Texas in a bid to improve the productivity of its relatively new truck plant in San Antonio.

The Texas plant is widely considered a big money-loser because it was built to produce about 240,000 full-size pickup tucks per year, with expansion plans to double that, but will probably end up building about 70,000 trucks this year. Total Tundra sales through June of this year were 36,000 units.

However, given the modest volume involved — Tacoma in the first six months of this year sold 53,000 units — adding in the compact pickup truck to the model mix at San Antonio may not be enough to make the plant profitable.

Sales of Tundra full-size pickup have never approached Toyota’s ambitious targets; and the continuing strength of GM and Ford in the full size  truck market is making it very difficult for Toyota to gain market share.

TMC Executive Vice President Atsushi Niimi said that Toyota also will now expand production of the Corolla in Cambridge, Ontario to offset the loss of production at NUMMI, which had been the principal source of compact Corolla models for the North American market. Corolla production will now cease at NUMMI in March 2010, Nimmi said.

Niimi also said that Toyota will also have to increase imports of Corollas after NUMMI closes — so the company is protecting jobs in Japan where it has just closed an assembly line at one of its plants. In the medium to long-term, however, Toyota claims it would like to increase Corolla production in the U.S. Reading between the lines, however, Niimi’s remarks indicate that Toyota’s plans for further expansion in the U.S. have been shelved as it will to to save  Japanese jobs as it contracts to stop multi-billion dollar losses.  Niimi also implied that General Motors should get some of the blame for the closing of the Fremont plant.

“After the decision by General Motors to withdraw from the NUMMI joint venture, Toyota conducted a thorough review of its alternatives in light of current anticipated market conditions. Based on this review, we have determined that over the mid- to long-term, it just would not be economically viable to continue the production contract with NUMMI. This is most unfortunate, and we deeply regret having to take this action,” Niimi said.

Niimi also cited the heavy cost of doing business in California.

Meanwhile, GM officials said the decision to withdraw from NUMMI was tied to decision to shutdown the Pontiac brand.

“A key benefit of the joint venture was the production of a single model, most recently the Pontiac Vibe, which GM discontinued production of earlier this month. Despite extensive discussions, GM and Toyota were unable to reach an agreement on a future product plan that made sense for all parties. Without a GM product at NUMMI, it did not make sense for GM to continue with its interest in the NUMMI joint venture,” a GM spokesman said.

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