REFILE-Toyota delays planned start for Mississippi plant

DETROIT Mon May 12, 2008 11:05pm BST

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DETROIT (Reuters) - Toyota Motor Corp (7203.T) on Monday said it would delay the start of production in a new Mississippi plant, the latest sign that the world's largest automaker is struggling with the slump in the U.S. auto sales.

Toyota now plans to start production at its plant under construction near Tupelo, Mississippi in May 2010, about five months later than initially planned.

In addition, Toyota will start at a production volume of 120,000 vehicles, just 80 percent of capacity, a spokesman for the automaker's U.S. manufacturing company said.

Toyota announced plans to build a $1.3-billion plant assembly plant in early 2007. The assembly plant, which is expected to employ some 2,000 workers, will build Toyota's Highlander crossover utility vehicle.

Victor Vanov, a spokesman for Toyota Motor Engineering and Manufacturing North America, said the automaker had adjusted its initial plans for the Mississippi plant in response to the weaker U.S. vehicle market.

But by delaying the start of production, the Tupelo plant also will be able to start with a revamped version of Highlander due in 2010 and avoid the expense of making tooling changes soon after the start of operations, Vanov said.

"It just made sense to start with the new product," he said.

U.S. sales of the Highlander were up 4 percent through the first four months of the year, although Toyota's overall sales have dropped by 4 percent over the same period.

Last week, Toyota forecast its first annual net profit decline in seven years, citing the drag from a stronger yen, rising materials prices and the slowing U.S. economy.

In response, Toyota executives have said the automaker has set aside more cash for consumer incentives to support sales of sport-utility vehicles and pickup trucks, an area of the market that has been especially weak because of rising gas prices.

Toyota also has production of its Tundra pickup trucks at its San Antonio, Texas plant and its Sequoia SUV at its Princeton, Indiana plant.

With just over 16 percent market share, Toyota now ranks as the No. 2 automaker in the U.S. market, ahead of both Ford Motor Co (F.N) and Chrysler LLC and behind only General Motors Corp. (GM.N)

Toyota already is recruiting skilled workers, including tool and die engineers, for the Mississippi plant, Vanov said. The company now plans to begin hiring assembly line workers in early 2009, he said.

"We had originally planned on doing that later this year," he said.

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