Toyota cuts global auto production

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Back in May, the blog suggested that “Chrysler’s bankruptcy marks a ‘tipping point’, when the first major company is finally forced to adjust to a permanently lower level of demand.” Now comes news that Toyota is to follow Chrysler’s lead, and will cut production on a global basis

Toyota produced 9.24m autos last year, but only expects to make around 7m this year. Reports now suggest it is considering cutbacks of between 0.7m – 1m in its total capacity, including the closure of a 220,000 plant in Japan. This is in spite of the support provided by the various auto scrappage schemes, which have increased demand for Toyota’s fuel-efficient vehicles.

History provides little evidence as to what happens after scrappage schemes end, as they have not been tried before on a major scale. But actions tell their own story. If a relatively successful company such as Toyota is cutting capacity, it suggests little confidence in a quick recovery to previous demand levels.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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