Toyota vows to achieve manufacturing cost reductions at domestic production plants

Toyota announced recently it had increase automobile production in Japan for the first time since the March 11 earthquake and tsunami battered the firm's domestic manufacturing facilities. Toyota manufacturing chief Atsushi Niimi affirmed achieving future manufacturing cost reductions could prove exceedingly difficult because of the strong yen.

Toyota rivals Honda and Nissan, the second- and third-biggest Japanese automakers, respectively, have increased their automobile production in other nations as they worked to overhaul their supply chains and improve strategic sourcing initiatives following the natural disasters.

However, Toyota is instead focusing on enacting business cost reductions at its domestic production plants through a number of measures. Regardless of the strength of the yen, the company will continue to upgrade its domestic facilities, officials said this week.

The Wall Street Journal reports Niimi is moving forward with plans to improve performance at its carmaking facilities. What's more, the firm is hopeful efficiency improvements will lead to increased output and contribute to rising sales. Though the global automobile market slowed in the wake of the March 11 events, car sales in the U.S. and elsewhere jumped in September, according to newly released data.

"We will be tremendously competitive once the yen comes back to a more balanced level as a result of our production technology innovation," Niimi said in an interview.

Toyota aims to overhaul its production lines in hopes of making profits at 80 yen to the dollar. That figure is higher than the Japanese currency's current record high of roughly 76 yen to the greenback.

Moreover, Toyota officials confirmed they have no plans to scale back domestic manufacturing, vowing to produce three million vehicles per year at domestic facilities. The world's ever-changing currency markets significantly affect profit margins at the world's biggest automaker.

For example, every time the dollar strengthens or weakens by one yen, it affects Toyota's annual operating profit by about $450 million, according to the WSJ. Niimi asserted the company is seeking to increase its profit margin, even in the face of a historically strong yen.

"Even if (the dollar) hits 75 yen, we will do our utmost to sharpen our competitiveness through," he affirmed.