Toyota to scale back domestic production amid tax hike

Featured Japan - March 7th, 2013
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The world’s largest automaker has also set back its annual production target to 2.7 million vehicles in 2015, backtracking from a long-running target of at least 3 million cars.

Reports are suggesting that consumption tax hike is also forcing the company to take more production abroad.

In late 2012, Toyota announced a domestic production target of 3.1 million units in 2013 and subsequently told its major suppliers to expect the figure to be 3 million vehicles in 2014.

Toyota’s reduced output to 2.7 million units would significantly affect Japan’s auto industry and would impact parts suppliers and showroom operators, according to The Asahi Shimbun.

In 2009, the second year of the global financial crisis, Toyota managed to assemble 2.79 million vehicles in Japan. Two years later, when a magnitude-9.0 earthquake and tsunami devastated industry in coastal northeastern Japan and supply lines were further destroyed after heavy flooding in Thailand, the automaker managed to manufacture 2.76 million vehicles.

The government plans to raise the consumption tax from its current level of 5% to 8% in April 2014, and to 10% in October 2015.

More Japanese automakers are shifting production overseas. “It is our basic strategy to produce vehicles wherever there is demand,” Toyota officials said.