Toyota Says It's No Longer Profitable in North America

[2QuickZ's]

[source: Detroit News]

No big surprise in our current market.

Tuesday, July 21, 2009

Toyota says it's no longer profitable in North America

David Shepardson / The Detroit News

Washington -- Toyota's top executive in the United States said Monday the company was reviewing its entire operation here, including whether to close a factory in California and when to open a factory in Mississippi.

In an hour-long interview with reporters at Toyota's Washington office, Yoshimi Inaba said Toyota is not profitable in North America despite cost cutting in the organization, but he said he hopes the company could be profitable in its next fiscal year in North America. Inaba, who is president and chief operating officer of Toyota Motor America and chairman and CEO of Toyota Motor Sales USA, is taking up his responsibilities at a crucial time for the Japanese automaker.

Toyota's sales have fallen 38 percent in the first six months of the year -- to 770,000 cars and trucks from nearly 1.25 million vehicles in the first six months of 2008. U.S. industry auto sales fell 35 percent in the first half of the year.

Among the issues the company is considering in its re-evaluation process is whether to keep open the 25-year-old New United Motor Manufacturing Inc. assembly plant in Fremont, Calif. The plant, which employs 4,700 people, is a joint venture formed with General Motors, but the Detroit automaker recently withdrew from the pact during its stay in bankruptcy court.

"That put us in a very difficult position," Inaba said. "We are carefully evaluating all the options."

He didn't commit to a timetable for a decision on Nummi, but said a decision would be made "quite soon." He said Toyota hadn't received an incentive package from California yet.

The hourly workers at Nummi are represented by the United Auto Workers, and the contract expires next month. Inaba said the UAW contract "is one consideration, but not the single deciding factor."

Inaba noted that California is Toyota's single biggest market in the United States, and closing the factory would negatively impact its image there.

The company also is contemplating what to do with its Mississippi plant. Toyota has completed the structure, but not moved equipment into it or given a date it might open because of the sharp decline in auto sales. It was scheduled to open next year. Toyota has said it may build the Prius in Mississippi, but Inaba said those plans are unclear.

Asked whether Toyota could shelve its Mississippi plant permanently, Inaba said, "I hope not," and added, "I'm not that pessimistic" about its future.

"Toyota is certainly at a crossroads with respect to capacity," said Michael Robinet, vice president of global forecast at CSM Worldwide. "Virtually every manufacturer is stepping back and looking at their capacity."

Inaba refused to rule out layoffs or plant closures at its other North American plants.

Inaba said the company had made mistakes in making too many decisions in Japan, urging more "decentralization" of decision-making.

Because of Toyota's success for the last eight years, there was an attitude among some executives that, "OK, now we have been so successful, we understand the market, so can make a decision there rather than here," Inaba said.

Inaba said the company is listening to the market, and customers "had been a little bit lost."

When asked whether Toyota had become complacent, he said, "Complacent or arrogant -- a lot of people use that -- I don't know," he said, adding that the company had tried to guard against those qualities.

Inaba acknowledged that Toyota vehicles had often lacked "passion" and that the company's vehicles must be "more exciting, more nimble."

"Toyota is a good car but not exciting. Those are the comments we usually (or) always get," Inaba said.

Inaba said he supported the decision of the U.S. government to rescue General Motors Co. and Chrysler Group LLC with $65 billion in loans. "Stepping into Chrysler and GM was a necessary step for the government, for the country," Inaba said.

But he said he hoped the U.S. government would have a "free-market level ground in mind in deciding what to do next."

He also said GM and Chrysler were right to shrink their dealer networks. Toyota, he said, has no plans to expand its dealer network in the U.S.

Edited July 21, 2009 by Z-06

[Drew Dowdell]

[Paolino]

Perfect! I didn't even know we had that one!

[Drew Dowdell]

We didn't. I added it specifically for this post.

[Paolino]

We didn't. I added it specifically for this post.

This is partly why you rule.

[z28luvr01]

My guess is they're planting the seeds of a move of much of their production to Mexico, Canada, or anywhere else cheaper. All those American workers that they pretend to care about will be out of work, and all those who claim that Toyota is as American or more American than GM/F/C can drink a nice tall glass of STFU juice.

Oh, and I agree with Paulie in that Oldsmoboi rules.

[Z-06]

My guess is they're planting the seeds of a move of much of their production to Mexico, Canada, or anywhere else cheaper. All those American workers that they pretend to care about will be out of work, and all those who claim that Toyota is as American or more American than GM/F/C can drink a nice tall glass of STFU juice.

Oh, and I agree with Paulie in that Oldsmoboi rules.

Any guesses for if they indeed move the production out, that it will make national news forget getting a backlash?

[balthazar]

Fascinating that the wunderCo was running that close to the red, AND interesting to note the relative unpreparedness that resulted in TMC losing more sales than the industry average. Too much focus on hulking, gas-sucking SUVs & crossovers ???

[2QuickZ's]

[source: Detroit Free Press]

Again, not a surprise but now the Detroit Free Press is reporting NUMMI will be shut down. Any bets that GM comes out looking like the bad guy in the NUMMI closure and Toyota comes out smelling like roses? This despite the fact that only a small percentage of vehicles NUMMI produced were for GM?

Toyota Motor Corp. will wind down its 25-year-old joint venture with General Motors Co., threatening the jobs of 4,700 workers at New United Motor Manufacturing Inc., California's only major auto factory, according to people familiar with the plan.

Advertisement

Toyota said Thursday that it would begin talks with Motors Liquidation Co., the business responsible for selling GM assets that were not part of the new GM that emerged from bankruptcy. Those assets include GM's half of NUMMI.

"There is a likelihood we would not buy the rest of it," Yoshi Inaba, Toyota's top North American executive, told reporters Thursday in Troy.

NUMMI's future dimmed last month after GM withdrew from the joint venture, which will halt production of the Pontiac Vibe next month.

NUMMI has the only UAW workforce at any Toyota plant, and it has matched or exceeded quality and efficiency of other Toyota factories.

When production of the Vibe stops, NUMMI will be making fewer than half the 420,000 vehicles it was equipped to produce. Consequently, the operation became a burden Toyota can't afford after reporting a record $7.7-billion loss in the first three months of 2009.

Toyota could shift production of NUMMI's remaining models, the Tacoma pickup and Corolla sedan, to plants in Mexico and Canada, respectively. Its newest plant in Mississippi is idle because Toyota has not decided what to produce there.

[Justin Bimmer]

It was basically said about a month ago that NUMMI wasn't going to make it. When GM put it into the liquidation pile toyota basically said they didn't want it either.

[84Cressida]

My guess is they're planting the seeds of a move of much of their production to Mexico, Canada, or anywhere else cheaper. All those American workers that they pretend to care about will be out of work, and all those who claim that Toyota is as American or more American than GM/F/C can drink a nice tall glass of STFU juice.

Oh, and I agree with Paulie in that Oldsmoboi rules.

Wow, just wow. Do you also think someone was in the grassy knoll?

[Drew Dowdell]

Well it's not out of the question. They're closing NUMMI. They are losing their shirt on the Tundra plant.

[A Horse With No Name]

Good. Let them give up the Tundra.

Or let the plant bleed them dry.

Toyota got lazy. They never put the design and marketing $ into Scion to make it keep on going and growing after getting it off of the ground.

Chris

[FUTURE_OF_GM]

My guess is they're planting the seeds of a move of much of their production to Mexico, Canada, or anywhere else cheaper. All those American workers that they pretend to care about will be out of work, and all those who claim that Toyota is as American or more American than GM/F/C can drink a nice tall glass of STFU juice.

Oh, and I agree with Paulie in that Oldsmoboi rules.

It won't matter...

If they do, the Yota humpers will just change their "pro" argument to something else (like they always do)

For example: "Toyota is actually more american and patriotic because they're greener!"

Same $h! happened with the "quality war". It went from actual quality issues to interior cheapness, then to 'panel gaps', then to ergonomics, and now to whether or not the dash is soft enough to wipe your ass with.

Detroit will always be fighting a losing battle.

[FUTURE_OF_GM]

[source: Detroit Free Press]

Again, not a surprise but now the Detroit Free Press is reporting NUMMI will be shut down. Any bets that GM comes out looking like the bad guy in the NUMMI closure and Toyota comes out smelling like roses? This despite the fact that only a small percentage of vehicles NUMMI produced were for GM?

ABSOLUTELY.

It's already slanted that way:

Toyota Motor Corp. will wind down its 25-year-old joint venture with General Motors Co., threatening the jobs of 4,700 workers at New United Motor Manufacturing Inc., California's only major auto factory, according to people familiar with the plan.

Advertisement

Toyota said Thursday that it would begin talks with Motors Liquidation Co., the business responsible for selling GM assets that were not part of the new GM that emerged from bankruptcy. Those assets include GM's half of NUMMI.

"There is a likelihood we would not buy the rest of it," Yoshi Inaba, Toyota's top North American executive, told reporters Thursday in Troy.

NUMMI's future dimmed last month after GM withdrew from the joint venture, which will halt production of the Pontiac Vibe next month.

NUMMI has the only UAW workforce at any Toyota plant, and it has matched or exceeded quality and efficiency of other Toyota factories.

When production of the Vibe stops, NUMMI will be making fewer than half the 420,000 vehicles it was equipped to produce. Consequently, the operation became a burden Toyota can't afford after reporting a record $7.7-billion loss in the first three months of 2009.

NOTE: This is pretty much planting GM as the cause of it's collapse eventhough something like 75% of NUMMI was utilized by Toyota.

Toyota could shift production of NUMMI's remaining models, the Tacoma pickup and Corolla sedan, to plants in Mexico and Canada, respectively. Its newest plant in Mississippi is idle because Toyota has not decided what to produce there.

NOTE: Toyota could move production out of the states, however, it has a BIG, SHINEY, NEW plant that is ready to CONTRIBUTE to american jobs!!! (In other words, the Mississippi plant need not even be mentioned, since it relates in NO WAY to NUMMI. The only reason it was mentioned was PR control)

[A Horse With No Name]

Detroit will always be fighting a losing battle.

Not sure. I am noticing Toyotas being traded on American Iron around here, and fewer American cars traded in on Toyotas.

Chris

Edited July 27, 2009 by 66Stang

[FUTURE_OF_GM]

Wow, just wow. Do you also think someone was in the grassy knoll?

Ya know...

It's funny that all of the Toyota people seem to think that "everything is ok"

Yeah, we GM fans have been there/done that. We thought everthing was ok back in 2005 when GM kept saying "We have BILLIONS of dollars to run the business" My, how things changed.

But I'm sure Toyota will come out of this as the golden boy as always. The justice would just be too sweet for it to turn out any other way.

[84Cressida]

Ya know...

It's funny that all of the Toyota people seem to think that "everything is ok"

Yeah, we GM fans have been there/done that. We thought everthing was ok back in 2005 when GM kept saying "We have BILLIONS of dollars to run the business" My, how things changed.

But I'm sure Toyota will come out of this as the golden boy as always. The justice would just be too sweet for it to turn out any other way.

What makes you think I was saying "everything is ok"? I was responding to the idiotic conspiracy that has absolutely no merit. It's more useless Toyota bashing.

Edited July 30, 2009 by 84Cressida

[GMman]

It's more useless Toyota bashing.

No, actually, saying something like Toyota builds the ugliest cars and while they copied the heck out of Ford, the tundra is the dumbest looking sorry excuse for a truck that has ever been built is toyota bashing. Not useless though......oh and also, the tree hugging, head in the sand, liberal minded, sorry a-holes that buy toyotas over American vehicles need to move their stupid asses to japan since the japanese do everything so much better than America. I'm so sick of toyota. No matter how bad of gas mileage toyotas get, no matter how many of them break down, no matter how ugly they make 'em, there is always gonna be those people that believe they get the best mileage of any vehicle on the road, that they NEVER break down, and that they are good looking. It's a sad state of affairs. Toyota deserves to go bankrupt.