Toyota will not be making new factories for next two years

Paying heed to analysis of economists that Japanese automobile markets are heading for a slowdown followed by lack of demand in emerging markets of Asia similar to economic slowdown in Europe and America during 2007, Toyota has announced that it will not set up any new passenger car manufacturing units till 2016. The year 2013 was profitable for Toyota and it managed to stay as top auto manufacturer with sales of 10 million units within a single year though it suffered a few setbacks due to model recalls and labor unrest in some parts of Asia. With growing crisis around production issues with factories in India and Indonesia and lack of demand in these markets due to economic or political turmoil, Toyota has plans of concentrating more on expanding existing sales networks instead of expanding new factories.

Toyota Etios Cross Orange

Toyota Etios Cross Orange

According to Toyota’s senior executive the company will be using lessons learnt in 2007 to curb expenses and utilize existing capacity in an effective manner to meet demand even though it is facing supply constraints for some vehicles which are manufactured exclusively in Japan. Though demand in Europe, Australia and North America is peaking the firm has put all plans of setting up new production units on the back burner. The firm has rather asked its employees to plan new schemes to increase production using existing capacity in an effective manner.  To conserve revenues Toyota is keen on reclaiming underutilized capacities in new production units to make products which can be exported easily to meet overseas demand.

Though Toyota had a rough year in 2013 in India it has setup a strong revival strategy to stimulate demand by launching new products and increasing sales network. Toyota s marketing team has predicted that its overall sales across the world witness an overall increase of 117,000 units above the 10 million sold last year, therefore its revenues are likely to remain unaffected due to slump in Japan’s regional markets. The firm’s demand for new vehicles will come from growing markets of China, South America and Africa. When asked about how Toyota will meet the increase in demand for its recently launched brands like Camry and Lexus the firm’s spokesperson said that efficient use of existing capacity will help meet this demand.

Lack of transparency in demand from emerging markets in Asia and Africa are the main reason for this delay in investing on new production units by Toyota. After the problems it faced during financial meltdown and economic crisis leading to piling up of inventory and locked up revenues, Toyota does not want to repeat the mistake it made earlier. Also the firm in recent years has faced problems of product recalls wherein it had to recall new cars to replace faulty parts at a huge expense leading to erosion of company name too therefore Toyota wants to grow in a planned manner wherein every phase of production is tightly controlled. While it does not want to lose the opportunity of meeting latent demand for its products it does not want to lose future demand by supplying substandard products.

This post was written by

Pavan Kumar – who has written posts on Toyota Cars India | New Toyota Car | Latest Toyota cars.
I am into the auto blogs field for quite a long time. Living my passion of reviewing cars.

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