Will Toyota Shrink Domestic Capacity?

Toyota Motor Corp. plans to continue reducing its annual production capacity in Japan which was 3.9 million vehicles before the global financial crisis to 3.1 million units by 2014 from about 3.6 million units this year, The Nikkei reports, without citing sources.

Toyota said last October that it would trim production by 200,000 units at its Tahara assembly plant in Aichi Prefecture and 30,000 units at the Higashi-Fuji plant in Shizuoka Prefecture run by affiliate Kanto Auto Works.

Even after reducing capacity in Japan to 3.1 million units, flexible manufacturing systems will allow Toyota to produce as many as 300,000 units per year above that straight-time capacity, the Tokyo-based newspaper says.

The carmaker is shifting production abroad to make itself less vulnerable to the strong yen. Toyota intends to boost its annual global production by increasing overseas capacity to roughly 6.8 million units by 2015 from about 5.3 million units this year, according to The Nikkei.

Toyota plans to build 3.4 million vehicles in Japan this year. The company has pledged to maintain annual domestic output of at least 3 million units to support its suppliers and the Japanese economy.