Toyota Motor Corp. has used Japan as an export base, but that must change. Toyota's catastrophic financial results prove that that kind of nationalistic policy isn't sustainable even for Toyota.
Toyota's stunning $28 billion swing from profit to loss in the fiscal year that ended March 31 was due in large part to the company's own inertia. Lulled by profits on vehicles shipped from Japan -- profits fattened by a favorable dollar-yen exchange rate -- Toyota relied far more than its rivals on imports in the U.S. market. Fully 45.1 percent of its sales in the United States last year were imports.
But now, currency rates have swung against Toyota. To return to profitability, it will have to hedge its currency exposure. By far the best way to do that is to build cars and trucks where those vehicles are sold. Toyota needs more factories in the United States.
Last year, Toyota exported about 60 percent of all the vehicles it built in Japan, up from about 36 percent in 1996. It is unrealistic for Toyota to expect that it will be able to maintain exports from Japan at current levels.
When auto sales tanked, Toyota put on ice plans to build the Prius at a new factory in Mississippi. It should revive those plans and start work toward even more assembly plants on these shores.
That likely will mean cutting production in Japan -- maybe even closing a factory there. It will be a politically charged decision but the right one. It's the sort of decision that can best be made by someone whose name is on the building.
Akio Toyoda, grandson of the company's founder, takes over as president on June 23. He has promised "bold change." That change should include cranking up production in North America, even at the expense of Japanese production.