UPDATE:Toyota To Halt Output;Mitsubishi To End Chrysler Deal
18 February 2009 - 6:51PM
Dow Jones News
Hit by the standstill in auto sales, Toyota Motor Corp.
(7203.TO) announced Wednesday that it plans to further suspend
domestic output in April, while Mitsubishi Motors Corp. (7211.TO)
said it will effectively cut its long-standing ties with Chrysler
LLC.
The latest streamlining steps by the two Japanese car makers
reflect the dark days ahead for the auto industry as demand
continues shrinking. In January, industrywide sales dropped by over
20% in the U.S., Europe and Japan.
A Toyota spokesman said that the car maker will halt production
at 11 of its 12 plants in Japan for three days in April, reducing
total operating time during that month to 17 days.
However, he added that the world's biggest car maker expects its
domestic output volume to increase in May from April as its
inventory adjustment progresses and it prepares to launch new
models.
Toyota's latest production cutback comes after its decision last
week to offer job buyouts to all 25,000 of its North American
workers and to cut the workweek by 10% at some U.S. factories in a
bid to bring output levels down to meet sluggish sales.
In Japan, the auto maker is now in the middle of a plan to scale
back output by 54% for the quarter through March from the same
period a year earlier partly by suspending operations for 11 days
in February and March.
The Toyota spokesman declined to provide the volume of the
reduced production for April and said the company will decide on
how many vehicles it will build in May at a later date, monitoring
conditions in the auto market.
Also facing faltering sales and dwindling profits, Mitsubishi
Motors said separately Wednesday it will discontinue its original
equipment manufacturer contract with Chrysler in 2010, effectively
ending a tie-up that stretches back more than 30 years.
A Mitsubishi spokesman said the car maker decided not to renew
the contract under which Chrysler produces a pickup truck called
Raider that has recently seen slack sales.
Once the current production deal finishes, it will mark an end
to joint operations between the two car makers. Mitsubishi and
Chrysler currently run a joint engine production venture in the
U.S., but the engines are only provided to Chrysler.
The end of the alliance couldn't come at a worse time for
Chrysler, which is seeking an additional $2 billion in federal
funds on top of the $7 billion bailout it requested in December as
part of a viability plan submitted to the U.S. Treasury Department
on Tuesday.
The alliance between the two auto makers started in 1971 when
Chrysler took a 15% stake in Mitsubishi. The U.S. company, which at
one point had a 24% stake in Mitsubishi, dissolved their capital
alliance in 1993 but they decided to continue their joint
operations.
-By Yoshio Takahashi, Dow Jones Newswires; 813-5255-2929; yoshio.takahashi@dowjones.com