Toyota's UK operations drive back into profit

Toyota's UK car manufacturing operations returned to the black last year for the first time since 1998 with the help of efficiency improvements and a weaker sterling.

The Japanese car maker's Burnaston assembly plant near Derby and its engine factory on Deeside made a profit of £16.9m in the year to April, having run up cumulative losses of £740m since production began in the UK in 1992.

Alan Jones, the chairman of Toyota Manufacturing UK, said that the main reason behind the recovery in profits was the increase in productivity and output from the Burnaston plant.

Production of the Avensis and Corolla models at Burnaston is expected to reach 240,000 this year and will increase to 285,000 next year with the aid of a £50m investment in new facilities and the recruitment of an extra 500 staff.

However, the weakness of the pound against the euro and the yen is also helping Burnaston, which exports about 90 per cent of production, mainly to Europe but also to Japan. Burnaston is the only source of the Avensis and some versions of the car are shipped over to Japan.

The increase in output from Burnaston will contribute to an increase in Toyota's overall European production from 570,00 this year to 775,000 next year. The biggest single factor behind the increased production will be the opening of a factory in the Czech Republic owned jointly with Peugeot. The plant will produce a new Toyota-badged super-mini called the Igo at the rate of 100,000 a year.

Toyota's European sales are also growing strongly, from 835,000 last year to more than 900,000 this year. Sales in the UK are expected to reach about 138,000 - up from 130,000 last year - despite a slowdown in the market.

Figures released yesterday show that UK registrations of new cars fell by 6 per cent in October to 170,866 as the impact of interest rate rises began to bite. However, the Society of Motor Manufacturers and Traders, which compiles the figures, said it expected an increase in November sales.