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Saturday, July 12, 2008

Toyota to idle U.S. pickup, SUV lines


Staff writer

Facing surging gasoline prices and strong demand for fuel-efficient cars, Toyota Motor Corp. will suspend production of large pickup trucks and sport utility vehicles in the United States from early August to November.

News photo
Gleaming: Toyota Prius hybrid sedans are lined up outside a Toyota dealership in Boulder, Colo., in February 2007. AP PHOTO

Japan's top automaker will also produce its popular Prius gasoline-electric hybrid model in the late 2010s at an assembly plant being built in Mississippi, dropping its initial plan to produce the Highlander midsize SUV, a Toyota spokeswoman said Friday.

The decision apparently marks a turnaround in Toyota's strategy in North America, where it made a foray into the market for full-size pickup trucks last year to penetrate one of the last remaining bastions of General Motors Corp., Ford Motor Co. and Chrysler.

The decision was prompted by a 21 percent plunge in Toyota's U.S. sales in June.

This contrasts clearly with results at Honda Motor Co., which chalked up a slight increase in sales in the U.S., where the second-biggest automaker in Japan doesn't manufacture large pickups.

"I think Toyota's plan is a quick and realistic step that reflects the current sales environment," said Atsushi Kawai, a senior analyst at Mizuho Investors Securities Co.

He also said the decline in the popularity of large pickup trucks is "bad luck" for Toyota, because nobody could have forecast how bad gas prices would get.

Toyota plans to manufacture the Prius directly in the U.S. for the first time and has already started producing a hybrid version of its popular Camry in Kentucky.

"In North America, strong demand for hybrid vehicles is expected to continue. Therefore, Toyota Motor Corp., as a step toward a more stable North American production structure, intends to respond to customer needs by localizing hybrid vehicle production," Toyota said in a statement issued late Thursday.

Toyota aims to introduce hybrid versions of all of its models from sometime after 2010 and sell 1 million hybrids annually as early as possible in the decade. It also intends to launch a new hybrid model next year.

Sales of the Prius alone broke the 1 million unit milestone in April. Counting other hybrids, Toyota has sold somewhere around 1.5 million of the vehicles around the world.

In the statement, Toyota said it will suspend production of Tundra big pickups and Sequoia SUVs at the Indiana plant, the Tundra production line in Texas, and Tundra and Sequoia engine production in Alabama for three months from early August.

Sales of the Tundra have plunged in recent months. Toyota sold about 10,000 Tundras in June, down 53 percent from a year ago. In the first half of the year, it sold 77,000, down 8 percent from the same period last year. Sales of the Sequoia meanwhile rose 25 percent to 2,000 units in June, thanks to the launch of a remodeled version in December. Sequoia sales are up 29 percent to 17,000 units in the first half.

The suspension will follow plans by U.S. automakers to slash production of pickup trucks and SUVs amid falling demand for large vehicles as gas prices continue to rise.

But Toyota will not lay off employees at the Tundra and Sequoia plants or their engine plants in Alabama, the spokeswoman said.



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