Toyota may cut 2014 output over sales tax hike: Nikkei

Tue Oct 1, 2013 4:01pm EDT

Visitors look at Toyota Motor Corp's cars at the company's showroom in Tokyo August 1, 2013. REUTERS/Issei Kato

Visitors look at Toyota Motor Corp's cars at the company's showroom in Tokyo August 1, 2013.

Credit: Reuters/Issei Kato

(Reuters) - Toyota Motor Corp (7203.T) projected a drop in 2014 domestic production, expecting sales to fall after consumption tax is increased in April, business daily Nikkei reported.

The Japanese government said on Tuesday that it will raise the national sales tax to 8 percent in April from 5 percent. The hike is part of a package agreed to last year by the previous government and the two current ruling parties.

It is the first step in a doubling of the consumption tax — similar to a goods-and-services tax in other countries — over two years.

Toyota notified major parts suppliers of its projection of an output of about 3 million vehicles next year — down by 350,000 cars from the planned output this year, Nikkei said.

The preliminary figure was estimated in August and Toyota will finalize a revised plan by the year-end, the Japanese paper reported.

Demand would likely increase, before the tax goes up, and then fall from April, Nikkei said citing a senior Toyota executive.

(Reporting by Varun Aggarwal in Bangalore; Editing by Joyjeet Das)

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