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April 17, 2008, 7:47 a.m. EDT

Toyota unit Hino to halt California output amid weak demand

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By Yoshio Takahashi

TOKYO (MarketWatch) -- Hino Motors Ltd. (7205.TO) said Thursday that it will stop producing trucks in California in July and shift output there to a factory in West Virginia to improve production efficiency amid faltering auto demand in the U.S.

Toyota Motor Corp. (7203.TO) produces commercial trucks for Hino, its truck-making subsidiary, at its TABC plant in Long Beach, California. Toyota also manufactures auto parts for Toyota brand vehicles at the plant.

Hino trucks were produced at full capacity at the plant during the fiscal year ended March but the truck maker now anticipates difficulty in running operations at the same pace this fiscal year due to slackening demand as the U.S. economy may be entering a recession.

In December, Hino said it aimed to sell 10,500 trucks in North America in 2008, up 48% from 7,100 trucks sold in 2007. A Hino spokesman said the company hasn't changed this sales target but it will update its projection next Thursday when it reports its earnings.

Hino's decision follows Toyota's plans to soon begin adjusting production of pickup trucks, minivans and sport-utility vehicles at plants in Texas and Indiana, though there is no change in the Japanese auto giant's production plan for this year.

That suggests other auto makers may be forced to cut back their output to avoid an inventory pileup.

Last year, Hino produced about 5,000 trucks at the California plant and about 300 at a new plant in West Virginia, which it began operating last November.

The West Virginia plant has production capacity of 2,500 trucks on a single daytime shift basis and can double its capacity by switching to a two-shift schedule, the spokesman said.

A Toyota spokeswoman said the TABC plant will continue to produce auto parts such as catalytic parts after ending production of Hino trucks and has no plan to cut the current workforce of about 850 employees.

-Contact: 201-938-5400

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