Toyota sees U.S. inventory in line by May
DETROIT (Reuters) - Toyota Motor Corp said on Tuesday that the production cuts announced so far would bring its U.S. inventory of unsold cars and trucks in line with demand by May but more reductions may be needed if demand falls further.
"I can't rule out any further production cuts because it'll all depend on where the market heads," Toyota's U.S. marketing head, Jim Lentz, said in an interview at the North American International Auto Show.
"But right now we're confident that by spring we'll be in good shape," he said.
The Japanese automaker, which saw its U.S. sales fall 15 percent last year, said in early December it was cutting North American production of its best-selling cars, including the Camry and Corolla sedans, in response to rising inventories and a slump in sales.
The automaker also suspended work on its new plant in Mississippi, which was slated to produce its popular Prius hybrid car beginning in 2010.
Inventories have built up at Toyota, which is known for running a lean and cost-efficient production system where parts are delivered just in time to be installed in vehicles on the assembly line.
Measured by the number of sales needed to clear inventory, Toyota's unsold stock of vehicles had doubled from 45 days a year ago to near 90 days for some vehicles, before production was scaled back.
Lentz said the construction of the factory in Mississippi, which is about 90 percent complete, would be finished but the facility would not be equipped for production.
Asked if Toyota plans to review the viability of the project, he said, "It's too early to tell."
Toyota, along with its rivals, has been stung by the collapse in demand for cars and trucks in the United States, a downturn that accelerated in October and November amid tightening credit and deepening consumer uncertainty.
Indications are that U.S. auto sales in the first quarter would be similar to the fourth quarter of 2008, but demand could see a gradual recovery later this year along with any uptick in the economy, Lentz said.
Lentz said the U.S. economic recovery, when it happens, would likely be strong.
"I think some type of U-shaped (recovery) is the most likely scenario," he said.
"Once consumer confidence starts to return, once the credit markets open up, we could see a fairly robust recovery in the auto industry," Lentz said. "The question is when does that take place."
(Editing by Peter Bohan and Brian Moss)
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