Toyota to Merge Car Manufacturing Units in Japan for Increasing Efficiency and Reducing Costs

Toyota recently announced that they would be combining their car manufacturing facilities in the northern part of Japan for boosting their efficiency. The biggest auto giant and its subsidiaries in Japan, Kanto Works and Toyota Auto Body Co., have agreed for converting two of their units into fully owned subsidiaries by exchanging shares next year in January.

Toyota will reportedly pay 0.25 share for each of Kanto Auto’s and 0.45 share for that of Toyota Auto Body’s. It may also integrate these units with other two units by July 2012. The company, which built around 43% of their models in the island of Japan in 2010, compared with both Nissan and Honda’s below 30%, aims to increase profitability of their operations in Japan.

The rising yen has reduced the value of their repatriated profits from their export markets. Central Motor Company, Toyota Motor Tohoku Corporation and Kanto Auto will start discussions by July next year for integrating into Toyota Motors. The Japanese auto giant has three different production centres in Japan, which include Aichi prefecture also their headquarters, northern Japan and Kyushu located in the southern part of Japan.

The company has reportedly stated that the merging of their car manufacturing units in the northern part of Japan will in no way affect jobs. They will halt some of their older factory lines, however the timing, or how many of them will be closed in not yet clear at the moment.

They are pushing this merger for maintaining their three output units in Japan. The president of the company, Akio Toyoda, said that the manufacturing condition in Japan is difficult right now; however they have decided to do whatever they can for securing their future. They are trying hard to protect the manufacturing business in Japan.

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