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Toyota to Boost North American Production by Nearly 50 Percent

September 13, 1994

TOKYO (AP) _ Toyota Motor Corp. is boosting car production in North America by 48 percent, meaning that within three years, nearly two-thirds of the Toyotas sold in North America will be built there.

Toyota, Japan’s largest automaker, said Tuesday it is making the move partially because of pressure on profits caused by the decline of the U.S. dollar against the yen.

The yen has soared more than 20 percent over the last two years against the dollar, meaning that revenue earned in dollars is worth less when sent back to Japan. The rise also makes Japanese wages and materials more expensive in dollar terms.

Other major Japanese manufacturers also have been increasing overseas production.

Japanese automakers have been forced to raise overseas prices to make up the difference in the yen. As a result, some Japanese models now cost several thousand dollars more in North America than comparable American-made cars.

Last month Toyota announced average price increases for most of its 1995 models of 3.3 percent, or $572, compared with initial 1994 prices. Honda and Nissan have announced similar increases, all blaming a higher yen and Honda also plans to increase production in the U.S.

Toyota plans to increase North American production to 790,000 vehicles in 1996, up from 533,000 in 1993.

That means more than 60 percent of its cars sold in the United States in 1996 will be North American-made, up from 46 percent in 1993, Toyota said.

Toyota’s Georgetown, Ky., plant is expected to boost employment from 5,500 as of July to about 6,000 in 1996.

Toyota spokesman Brendan Hagerty said Toyota does not plan any layoffs in Japan because of the move.

While the yen was part of the reason for the U.S. production boost, Hagerty there is a more fundamental one. ″Toyota really believes that to service a market well you have to produce there,″ he said.

Tuesday’s production announcement came a day after the first Avalon, a large sedan designed specifically for the U.S. market, rolled off the assembly line at the Kentucky plant. All Avalons, which replace the Cressida model, are to be built in Kentucky.

The automaker also said it plans in 1995 to shift production of all pickup trucks sold in the United States from Japan to the Toyota-General Motors joint manufacturing plant in Fremont, Calif., New United Motor Manufacturing Inc., also known as NUMMI.

NUMMI produced 98,000 pickup trucks last year, while 86,000 were imported from Japan, Hagerty said.

Overall, as a result of the increases in North American production, Toyota plans to cut its exports from Japan to the United States from 554,000 vehicles in 1993 to about 400,000 in 1996.

Japanese automakers also face a new U.S. regulation taking effect in October that will require cars sold in the United States to bear a sticker showing the percentage of North American-manufactured parts they contain. Japanese manufacturers fear that American consumers will prefer cars with high North American content.

The United States is Toyota’s largest market and its largest overseas production base.

Toyota previously has announced plans to increase procurement of parts and materials in the United States to $6.45 billion in fiscal 1996 from $4.65 billion in fiscal 1993.

Toyota’s net income fell 28.7 percent in fiscal 1994, which ended June 30, to 125.8 billion yen, or $1.26 billion, as sales dropped 8.3 percent.

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