Toyota maxes Prius output but cautious on expansion

TOYOTA CITY, Japan, June 5 (Reuters) - Toyota Motor Corp (7203.T) has brought back overtime at two domestic factories to ramp up production of its hot-selling Prius, but said it would tread cautiously before adding capacity for the hybrid model at its other manufacturing sites.

The world's biggest automaker said on Friday it was building about 2,300 units of the Prius hatchback per day on four assembly lines at the Tsutsumi plant and a factory belonging to affiliate Toyota Auto Body Co 7221.T.

That is about 1.5 times the pace needed to meet its global sales target in 2010 of 400,000 units for the world's top-selling hybrid car.

Start of planned production for the Prius at a new U.S. plant in Mississippi has been put on hold indefinitely to save investment costs amid record losses for Toyota.

The third-generation Prius, which went on sale in Japan in mid-May and is now being rolled out gradually in the United States and Europe, already has a waiting list of several months in Japan, where it became the best-selling model in May. [ID:nT228789]

"Sales are very strong in Japan, but we'll have to see how it does overseas first to decide whether a further capacity expansion (for the Prius) is needed," Toyota Executive Vice President Takeshi Uchiyamada told a small group of reporters during a two-day tour of Toyota's facilities, including the Tsutsumi factory, where the Prius makes up about 9 out of 10 cars coming off the assembly lines.

Uchiyamada, who led development of the first-generation Prius -- the world's first mass-produced hybrid car, launched in 1997 -- added that Toyota would only be able to open the Mississippi plant when it was confident of a pickup in U.S. sales and it was making best use of underutilised factories globally.

"Adding a line for the Prius would require investment in equipment, so we'll need to be cautious," he said.

Hybrid cars have enjoyed a sudden burst of popularity in Japan, where a new tax incentive for next-generation cars was introduced in April. Honda Motor Co's (7267.T) new Insight hybrid was the third-best-selling car in Japan in May. [ID:nT316781]

Toyota has set a target of selling more than 1 million hybrid vehicles a year soon after 2010 -- a goal that appears well within reach at the current pace of Prius sales. It offers more than 10 other gasoline-electric models across the Toyota and premium Lexus lines.

Preparations are already well underway at the battery factories of Panasonic EV Energy, Toyota's battery joint venture with Panasonic Corp (6752.T).

Inviting journalists to its factory for the first time, Panasonic EV Energy officials said expansion projects would ramp up battery module production to 1 million units a year by mid-2010.

The company provides 92-93 percent of its batteries to Toyota, and the rest to Toyota units Hino Motors Ltd (7205.T), Daihatsu Motor Co (7262.T), Honda, General Motors Corp GMGMQ.PK, with plans also to supply Chrysler soon, it said. (Reporting by Chang-Ran Kim; Editing by Hugh Lawson)