By Yoshio Takahashi
TOKYO—Toyota Motor /zigman2/quotes/200537742/composite TM -0.49% Corp. said it hopes to finalize details of its first group-wide reorganization of Japanese production facilities by this summer, as it tries to avoid a steep fall in profitability after its major recall.
A spokesman for the auto maker said Thursday that the plan includes revamping manufacturing operations at group companies such as truck-manufacturing subsidiary Hino Motors /zigman2/quotes/209422954/delayed JP:7205 -3.67% Ltd. and vehicle-assembling subsidiary Toyota Auto Body Co.
Toyota is attempting to rearrange its group's domestic manufacturing operations by vehicle type and size, and seeks to complete the transformation by the end of the decade, the spokesman said. He declined to elaborate.
Coping with the aftershock of the company's massive recall, Toyota is in the midst of efforts to regain customer trust by fixing problems with 8.5 million vehicles in the U.S., Europe, China, Japan and other markets. The quality concerns dragged down U.S. sales in January and February and the company was forced to offer generous discounts.
The world's biggest car maker expects to return to a net profit in the current fiscal year, which ends March 31, thanks to recovering auto demand and cost-cutting efforts. In the previous fiscal year, it had its first net loss in 59 years.
Toyota is aiming to become leaner still as the recent safety recalls have tarnished its reputation for quality. The quality issues could also cause bigger sales drops in more regions next fiscal year.
While Toyota has already factored in recall costs of 180 billion yen ($1.95 billion) for the fiscal year ending next Wednesday, analysts estimate recall costs of more than $5 billion will be needed over the coming fiscal year.
The realignment of Toyota's domestic production operations is part of the company's efforts to become profitable even though its global annual production could fall to as low as seven million vehicles. Toyota and its two subsidiaries, Hino Motors and Daihatsu Motor Co., built a combined 7.05 million vehicles world-wide last fiscal year. This was well below the Toyota group's global yearly capacity of 10 million vehicles.
Mamoru Kato , an analyst at Tokai Tokyo Research Center, pegs Toyota's current production pace at 2.9 million vehicles a year in Japan, well below full capacity of about four million.
The Toyota group has already started efforts to improve production efficiency overseas. Toyota said in December that it shifted production of light-duty trucks in Indonesia to a local plant run by Hino.
Write to Yoshio Takahashi at email@example.com