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Toyota to Boost North American Production by Nearly 50 Percent

September 13, 1994

TOKYO (AP) _ Toyota Motor Corp. will increase production in North America by nearly 50 percent over the next three years, in part to escape high costs in Japan caused by the powerful yen, the company said today.

The yen’s rapid rise makes Japanese wages and materials more expensive in dollar terms, and has forced Japanese automakers to raise prices in the United States. Some Japanese models now cost several thousand dollars more in North America than comparable American-made cars.

Toyota, Japan’s largest automaker, said it plans to boost its production to 790,000 vehicles in North America in 1996, up from 533,000 in 1993.

That will mean that 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.

Employment at Toyota’s Georgetown, Ky., plant is expected to rise as a result to about 6,000 in 1996 from 5,500 as of July.

Toyota will not compensate by laying anyone off in Japan, spokesman Brendan Hagerty said.

On Monday, 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, Toyota said.

Toyota said it also 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 Freemont, Calif., New United Motor Manufacturing Inc.

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.

Hagerty said part of the reason for the shift was the cost pressures related to the high yen.

″But Toyota really believes that to service a market well you have to produce there,″ he said.

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 $1.26 billion, as sales dropped 8.3 percent.

Honda Motor Co. also has announced plans to increase production in the United States.

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