Toyota Struggles to Maintain Domestic Output

Toyota Motor Corp. plans to shut down an assembly plant in Japan as it strains to maintain a domestic production target of 3 million vehicles per year, The Nikkei reports.

Toyota has announced it will close an underutilized factory in Shizuoka in 2020. Operated by an affiliate, the facility makes only 50,000 small cars, taxis and luxury sedans per year. The small cars are likely to be phased out, and the other models will be absorbed by other plants, according to the report.

Toyota has maintained a minimum 3 million-unit production rate in Japan for nearly 40 years, interrupted only by the global financial crisis in 2008 and Japan’s earthquake and tsunami in 2011. The carmaker has said the rate is the minimum necessary to maintain employment and support product development activities in Japan.

But The Nikkei says it will become increasingly difficult to sustain that base level because of the spending demands for innovations such as electrification, self-driving vehicles and ride-share services. A threatened U.S. import tax on foreign-made vehicles also would erode Japan’s ability to ship some 700,000 cars to the U.S. each year.