Toyota to cut UK losses but rules out more investment

The Japanese car maker Toyota is on course to halve the losses in its UK manufacturing operations this year after running up a deficit of about £130m last year.

Toyota executives also believe the Burnaston assembly plant in Derbyshire and the engine plant on Deeside are likely to hit their target of breaking even in 2003 even if the pound remains at current levels against the euro.

The UK manufacturing operations, which export about 75 per cent of their output to the Continent, fell into loss in 1999 and have remained unprofitable ever since.

In 2000, Toyota Motor Manufacturing UK made an operating loss of £130m. It is understood to have made a similar loss in 2001 and a loss of about £160m in the 15 months to April this year.

The reduction in losses this year has been achieved with the aid of cost-cutting measures and the introduction of the new Corolla model at Burnaston, which will lift total production this year to about 220,000 cars. Engine production is scheduled to reach 333,000.

Toyota has so far invested more than £1bn in the UK. However, Hiroshi Okuda, the Toyota chairman, yesterday ruled out any further investment in the company's UK operations for the foreseeable future.

European production is planned to increase from 225,000 last year to 500,000 in 2003 largely through the expansion of Toyota's car and engine plants in France, Poland and Turkey. The Japanese car maker also plans to build a new small car in partnership with Peugeot in the Czech Republic. The plant is scheduled to begin production in 2005 and will produce 300,000 cars a year, 100,000 of which will be Toyota-badged. Toyota aims to sell 2 million cars in the US next year and increase local US production to 1.48 million cars.