Beleaguered Toyota set to temporarily shut US plants

The shutdowns, announced yesterday, will affect Toyota's San Antonio, Texas, and Georgetown, Kentucky, plants and represent the second time the world's largest automaker has had to cut North American output because of a product safety crisis that has cost it sales and damaged its reputation.

Toyota Motor Corp faces a sales decline in the United States, its biggest and usually most profitable market, after the recall of more than 8.5 million cars worldwide since late 2009 for three separate defects.

Separately, US safety regulators said on Monday the number of reported fatalities linked to unintended acceleration in Toyota vehicles had risen to 34, with a recent jump in complaints accounting for more than a third of the total.

Since January 27, the National Highway Traffic Safety Administration has added reports of nine crashes from 2005 to 2010 to its complaint database, alleging 13 fatalities and 10 injuries.

Like other major automakers, Toyota books revenue when it produces vehicles and ships them to dealers. By cutting output, it is choosing to take the hit to its sales in order to keep inventories of unsold vehicles from rising.

Toyota's US sales dropped 16 per cent in January to the lowest level in more than a decade after the company suspended sales of about half of its inventory of vehicles due to accelerator problems.

A further sharp decline is expected for February since Toyota dealers expect that repairs to inventory will take most of the month to complete.

JPMorgan Securities auto analyst Kohei Takahashi said Toyota's end-January inventory was not excessively high at 79 days' supply of sales, and said the automaker would manage production to prevent inventory from spiking.

"Although it has already restarted production of models subject to recalls in North America, such production is being undertaken in lockstep with the prevailing sales conditions," Takahashi wrote in a report to clients.

Toyota's San Antonio plant, which makes the Tundra pickup truck, will be closed during a week in March and a second week in April, Toyota spokesman Mike Goss said.

That time will be used to install equipment in the plant to produce the smaller Tacoma pickup truck, he said. Tacoma production will be shifted from the Fremont, California, plant that Toyota previously announced would be shuttered.

Previously, Toyota planned to use weekends to install the Tacoma production equipment without disrupting Tundra output, Mr Goss said.