Global Car Manufacturing Industry
In recent months, there has been a lot of media interest on how well the 'cash for bangers' scheme introduced by the government has aided the financial recovery within the automotive industry. Although positive reports have emerged of how successful the scheme has been, the latest noises coming from industry insiders seems to be showing manufacturers still feeling the strain of the difficulties that still remain in the car manufacturer market.
Global Car Manufacturing Industry
Car Manufacturing Still in Decline As Toyota Pulls Out Over Reducing Production in UK Based Plants
By Derek A Rogers
In recent months, there has been a lot of media interest on how well the 'cash for bangers' scheme introduced by the government has aided the financial recovery within the automotive industry. Although positive reports have emerged of how successful the scheme has been, the latest noises coming from industry insiders seems to be showing manufacturers still feeling the strain of the difficulties that still remain in the car manufacturer market. Toyota in the UK are rumoured to be looking at halting production in the UK as part of a cost cutting initiative to reduce global production to coincide with the decrease in sales volumes during the worst credit crunch since the 60's.
Initially it appears that production will begin to slow in Japan by up to a massive 50% for a year, with the likely hood of halting production of another line in a UK plant by as early as next spring. Senior sources have declined to comment on this rumour, and appear to be staying quiet until the matter is officially made public. If this action is confirmed, these moves would cut Toyota's vehicle output by nearly 7%, that is, 700,000 less vehicles from the annual total of 10 million.
Currently, Toyota has a 4000 strong workforce in the UK, and prior to this news leaking out it was announced that in the Burnaston production line it would start to make a hybrid version of the Auris as early as next year. The likely hood of this happening remains pretty strong, however, Toyota still needs to make sure and continue to evaluate how well the market recovers, and adapt accordingly.
So How is the Global Recovery Looking for Toyota?
In recent times Toyota has done pretty well in terms of sales, and has not seen as sharp a slump as other manufacturers in the market. In particular, the recent measures by governments in the UK and US to promote a shift towards more fuel-efficient cars has helped models such as the Toyota Prius Hybrid out-sell many of the hybrid models offered by other manufacturers - in fact the Prius Hybrid was Japan's top selling car in July 2009.
However, the problem for Toyota is clear - Operating Loss of 9 months consecutively.
If Sales Have Been Good for Toyota, Why is it Making a Loss?
After the realisation and rapid onset of the Global recession, Toyota was slow to react to making the necessary changes to tighten the purse strings and adjust the business model. Manufacturers such as Honda and Nissan were a lot quicker off the mark to implement cost reductions, cutting jobs and pulling out of sponsorship of motor sports - which have worked well for these companies and actually resulting in operating profit in the same previous 9 months as Toyota.
Yurni Nishimura, deputy general manager of the investment advisory section of Daiwa Securities SMBC, stated, ' The idling of plants had been a negative factor for Toyota, so the fact they are moving to tackle this should be evaluated favourably.'
In conclusion, although the government help schemes designed to help car sales have aided car manufacturer to increase the volume of cars sold in the short-term, one of the largest and well respected manufacturers in the world, Toyota, is still reducing manufacturing and has still not fully come to terms with the downturn in the economy. Toyota could continue to struggle and make high losses, resulting in more job cuts for UK based employees, however, it appears that some steps are now being taken to compensate and stabilize the manufacturing giant which could save plants in the UK for seizing to operate completely.
Autonews contributed to this report.
By Derek A Rogers
In recent months, there has been a lot of media interest on how well the 'cash for bangers' scheme introduced by the government has aided the financial recovery within the automotive industry. Although positive reports have emerged of how successful the scheme has been, the latest noises coming from industry insiders seems to be showing manufacturers still feeling the strain of the difficulties that still remain in the car manufacturer market. Toyota in the UK are rumoured to be looking at halting production in the UK as part of a cost cutting initiative to reduce global production to coincide with the decrease in sales volumes during the worst credit crunch since the 60's.
Initially it appears that production will begin to slow in Japan by up to a massive 50% for a year, with the likely hood of halting production of another line in a UK plant by as early as next spring. Senior sources have declined to comment on this rumour, and appear to be staying quiet until the matter is officially made public. If this action is confirmed, these moves would cut Toyota's vehicle output by nearly 7%, that is, 700,000 less vehicles from the annual total of 10 million.
Currently, Toyota has a 4000 strong workforce in the UK, and prior to this news leaking out it was announced that in the Burnaston production line it would start to make a hybrid version of the Auris as early as next year. The likely hood of this happening remains pretty strong, however, Toyota still needs to make sure and continue to evaluate how well the market recovers, and adapt accordingly.
So How is the Global Recovery Looking for Toyota?
In recent times Toyota has done pretty well in terms of sales, and has not seen as sharp a slump as other manufacturers in the market. In particular, the recent measures by governments in the UK and US to promote a shift towards more fuel-efficient cars has helped models such as the Toyota Prius Hybrid out-sell many of the hybrid models offered by other manufacturers - in fact the Prius Hybrid was Japan's top selling car in July 2009.
However, the problem for Toyota is clear - Operating Loss of 9 months consecutively.
If Sales Have Been Good for Toyota, Why is it Making a Loss?
After the realisation and rapid onset of the Global recession, Toyota was slow to react to making the necessary changes to tighten the purse strings and adjust the business model. Manufacturers such as Honda and Nissan were a lot quicker off the mark to implement cost reductions, cutting jobs and pulling out of sponsorship of motor sports - which have worked well for these companies and actually resulting in operating profit in the same previous 9 months as Toyota.
Yurni Nishimura, deputy general manager of the investment advisory section of Daiwa Securities SMBC, stated, ' The idling of plants had been a negative factor for Toyota, so the fact they are moving to tackle this should be evaluated favourably.'
In conclusion, although the government help schemes designed to help car sales have aided car manufacturer to increase the volume of cars sold in the short-term, one of the largest and well respected manufacturers in the world, Toyota, is still reducing manufacturing and has still not fully come to terms with the downturn in the economy. Toyota could continue to struggle and make high losses, resulting in more job cuts for UK based employees, however, it appears that some steps are now being taken to compensate and stabilize the manufacturing giant which could save plants in the UK for seizing to operate completely.
Autonews contributed to this report.
Derek Rogers is a freelance writer who represents a number of UK businesses. For automotive industries, he recommends Whatpart?, one of the UK's leading suppliers of Used Car Parts.
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