Toyota Motor Corp. today revealed that it has scrambled its manufacturing plans to produce fewer light trucks and more hybrid cars in the United States.
Toyota said it will build the hot-selling Prius hybrid at its Tupelo, Miss., factory in late 2010, scrubbing a plan to make the next-generation Highlander crossover there.
Instead, the Highlander will be added to Toyotas underutilized truck plant in Princeton, Ind. Toyota also will suspend all production of Tundra pickups and Sequoia SUVs from Aug. 8 until November.
Next spring, all Tundra output will be consolidated at the San Antonio plant.
The rapid changes are uncharacteristic for Toyota, which is renowned for taking its time to make investment decisions. The moves demonstrate just how dire the U.S. truck market has become.
Toyota was planning to spend $1.3 billion to move the Highlander from Japan into U.S. production. Toyota spokesman Mike Goss said the company does not know how much the changes to that plan will cost or whether they will represent less total investment or more.
Toyota already has steel frame being erected in Tupelo, but no machinery has been put into place.
Key Japanese suppliers, including seat maker Toyota Boshoku America Inc. and Toyota Auto Body Co. Ltd., have begun building plants in the Tupelo area to supply the Highlander. Goss said Toyota remains committed to the suppliers that agreed to make Highlander parts in Mississippi, and they will instead receive Prius supply contracts.
But other supply-chain ripple effects have not been sorted out.
For example, parts makers now will have to supply the Highlander in Indiana. And Tundra pickup suppliers that have been producing parts in Indiana will have to address the trucks relocation to San Antonio.
Goss said Tundra suppliers operating in Indiana might receive replacement business supplying the Highlander.
He added that Toyota will continue to employ its entire regular work force in San Antonio and Indiana despite the August-November halt in production. A group of about 200 temporary workers in San Antonio was already being phased out.
Goss said full-time workers will undergo additional training and participate in plant improvement projects while the lines are down.
Tundras U.S. sales fell 52.9 percent to 10,238 vehicles in June, compared with 21,727 vehicles sold in June 2007. In the first half of the year, Tundra sales were down 7.6 percent compared with the same period of 2007.
Highlander sales were down 38.9 percent in June and 5.2 percent in the first half compared with the same periods a year ago.
Jeff Liker, University of Michigan engineering professor and author of "The Toyota Way" said Toyota had made a rare, out-sized mistake by betting big on the Tundra.
"That was more bold and ambitious than I normally expect from Toyota and more risky than they are used to," he said. "What they are doing now with the adjustment is more traditional Toyota."
Prius sales are down in the United States because Toyota cant keep up with demand. Sales declined 33.7 percent in June to 11,765 vehicles. Sales for the first half declined to 91,440 vehicles -- down 3.2 percent -- compared with 94,503 Priuses sold during the first half of 2007.
For its part, Toyota will show off its next-generation Prius at January's Detroit auto show amid expectations it will broaden its hybrid line-up under the Prius brand.
But in the meantime, it has had to contend with falling sales and Prius shortages.
"It's tremendous news. We are very excited," said John McEleney, a Toyota dealer in Clinton, Iowa.
"We've been sold out for five months and we have nothing to show customers in showrooms," he said. "Prius is very popular and the brand is going to become stronger and stronger."
Reuters contributed to this report