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Toyota may end Corolla exports from Japan due to yen

TOKYO (Reuters) - Toyota Motor Corp is considering halting exports from Japan of the Corolla sedan from around 2013 and shifting that output overseas due to the yen’s strength, the Tokyo Shimbun daily reported on Thursday.

The yen’s rise to a 15-year high against the dollar is threatening the competitiveness of Japanese exports and prompting manufacturers to consider shifting more output outside Japan.

The Corolla is one of Toyota’s best-selling models and is built in 15 countries. In 2009, Toyota made about 235,000 Corollas in Japan -- nearly 60 percent of those exported -- and 815,000 abroad. Toyota is due to start producing the Corolla at its new Mississippi plant from autumn 2011 after the closure of a California factory formerly owned with General Motors Co.

Toyota spokesman Paul Nolasco said the company was constantly looking to optimize its global production structure, but that no decision had been made regarding the shift of export-bound Corollas outside Japan.

“At the current exchange rate, the more Corollas Toyota ships overseas, the more money it loses,” Advanced Research analyst Koji Endo said. He added that to make money on the compact Corolla model, Toyota would have to shift production overseas or drastically reduce costs, or both.

Tokyo Shimbun reported that the world’s largest car maker was also considering shifting production of all Corolla cars sold in Japan to one of its subsidiaries. Toyota currently builds the model at its own Takaoka factory, and at two units, Kanto Auto Works and Central Motor Co.

In a similar move aimed at making its domestic operations more competitive, Nissan Motor Co said this month it may turn one of its Japanese factories into a new subsidiary, allowing it to broach wage negotiations with labor unions and seek lower prices from suppliers.

Most automakers have vowed not to close any assembly plants in Japan but executives have warned that suppliers may be forced to shift production abroad in a threat to jobs in Japan’s fragile economy.

“Maybe they (the government) don’t realize just how much damage (the strong yen) poses on companies,” Mitsubishi Motors Corp President Osamu Masuko told reporters on Thursday.

“I guess we have to speed up our efforts to deal with the strong yen. Shifting production overseas takes time, but for example we can vastly increase purchases of auto components from abroad. That can be done in the near term.”

Toyota is aiming to make its domestic factory lines more flexible and introduce other changes to be able to break even at a dollar rate of 90 yen and capacity utilization of 70 percent, equivalent to daily production of 12,000 units.

The dollar was trading near 81 yen on Thursday.

A production shift away from Japan would mean even more capacity in Japan would go unused unless Toyota is able to fill the hole with other cars.

Overall production of vehicles in Japan plunged 31.5 percent in 2009 to 7.93 million units, below 10 million for the first time in eight years. Exports fell by a much sharper 46 percent as automakers sought to limit foreign exchange losses.

Shares of Toyota closed up 3 percent at 2,930 yen, while the benchmark Nikkei average gained 1.9 percent.

Reporting by Chang-Ran Kim and James Topham; Editing by Nathan Layne

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