Toyota Says New U.S. Auto Plant Delayed

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AP
A senior Toyota executive said Monday that plans for a new auto assembly plant in Mississippi are being delayed by worries about slumping American auto sales and a broader U.S. economic slowdown.

The vehicle assembly plant being built in Blue Springs, near Tupelo, Miss., was initially to be up and running by late 2009 or early 2010, said Toyota Motor Corp. Executive Vice President Mitsuo Kinoshita.

That has now been pushed back to mid-2010 after Toyota reviewed the plans and considered the signs of a slowdown in the U.S. market following the subprime mortgage crisis, Kinoshita told a small group of reporters at a Tokyo hotel.

"We made adjustments within a certain range of time," he said. "The change wasn't that critical."

Toyota, the world's second-biggest automaker in annual vehicle sales after General Motors Corp., had been on a roll with its offerings of small cars and gas-electric hybrids amid soaring oil prices.

But Toyota is seeing trouble signs in months ahead because of an expected decline in U.S. sales and a weak dollar that will erode the value of its overseas earnings.

Last week, Toyota forecast that for the financial year ending March 31, 2009, its annual sales would drop for the first time in nine years and that its profit would decline for the first time in seven years.

Toyota's list of problems is growing and includes soaring material and energy costs and a stagnant auto market in Japan. A weak dollar, now hovering above 103 yen compared with nearly 120 yen last year, erodes the income of Japanese exporters.

U.S. vehicle sales have been falling in recent months, hurting General Motors Corp. and Ford Motor Co. more than Toyota.

American auto sales are projected to fall to about 15 million vehicles in 2008 from about 16 million last year if declines continue at about the same pace for the rest of the year, according to Autodata Corp., which compiles such industry numbers.

Other Toyota executives expressed some worries about the home Japanese market, which has been stagnant for years.

They said they hoped to attract a wider age range with new luxury minivan models, which bring in bigger profit than smaller models.

"It's an important part of the market," Toyota President Katsuaki Watanabe said Monday. "It's a stable part of the market and we want to expand that."

Toyota also raised the prices on the two new minivan models that went on sale in Japan on Monday. Kinoshita and Watanabe said the rise did not reflect merely rising material costs, but were influenced by other factors, including better features and rivals' prices.

Toyota has already started raising prices on its base models in the U.S.

The company projects that its profit this fiscal year will tumble 27 percent to 1.250 trillion yen ($12.1 billion), while annual sales are seen falling 4.9 percent to 25 trillion yen ($241.8 billion).

Its shares dipped 0.9 percent to 5,250 yen ($50.80) in Tokyo.