Toyota switches parts supplies to Continent

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The Independent Online

The Chairman of the Japanese car maker Toyota warned yesterday that the strength of sterling is forcing it to switch component orders for its UK manufacturing operations to suppliers in the eurozone.

The Chairman of the Japanese car maker Toyota warned yesterday that the strength of sterling is forcing it to switch component orders for its UK manufacturing operations to suppliers in the eurozone.

Hiroshi Okuda said: "We will continue to make cars in the UK, but depending on the trends in currencies we may shift procurement of parts to the Continent."

Toyota has also told all 220 of its component suppliers that they must bill in euros when bidding for new business. The company, the world's third-biggest car maker, has also demanded a 30 per cent reduction in the cost of developing new models.

Toyota has 110 UK suppliers and spends £870m a year on components for its Burnaston car plant and Deeside engine factory, 60 per cent of which are UK-sourced.

This proportion is likely to drop to 50 per cent and perhaps lower. However, UK suppliers will benefit when Toyota's new factory at Lens in France starts production of the Yaris in January. About 30 per cent of the £530m component spend will be with UK suppliers.

Toyota made a loss in Europe in the second half of last year but has raised its forecast of overall group profits in this half by 43 per cent to Â¥100bn (£640m) because of strong sales in its domestic, US and European markets.

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