Image: Toyota Motor Corp. President Katsuaki Watanabe
Katsumi Kasahara  /  AP
Toyota Motor Corp. President Katsuaki Watanabe is leading the automaker's drive to be the No. 1 in the world.
updated 9/18/2006 12:14:26 PM ET 2006-09-18T16:14:26

Toyota Motor Corp. is quickening its quest to unseat ailing rival General Motors Corp. as the world's biggest automaker and widen its lead over Ford Motor Co. with reported plans to boost overseas production by 40 percent to 5 million vehicles by 2008 and blueprints for higher output in North America.

The news comes just days after Ford announced drastic steps to remold into a smaller, more competitive company, slashing thousands of jobs and shuttering two plants to cut costs. Ford's overhaul was aired just as DaimlerChrysler said it would cut U.S. production through the rest of 2006 and follows big cutbacks at GM earlier this year.

Toyota, by contrast, is planning to increase overseas production by 40 percent of its 2005 level to 5 million vehicles by 2008, Japan's Nihon Keizai newspaper reported Sunday, without saying how it got the information.

In North America alone, the world's largest auto market, the Japanese company intends to raise production by 20 percent to 1.84 million vehicles in that period, the business newspaper reported. The Toyota City-based company aims to meet the target with the help of new plants previously planned for Texas and Canada, it said.

The vastly different outlooks underline the diverging fates of Japanese and American automakers. While U.S. competitors are closing plants, letting workers go, and trimming production amid weak sales, Japanese manufacturers, including Toyota and Honda Motor Co., are posting record earnings and cranking output to keep up with demand.

In May, profit-rich Honda announced sweeping plans to spend $1.18 billion on new plants in the United States, Canada and Japan, and boost production to meet soaring sales of fuel-efficient models.

Nissan Motor Co. is meanwhile in talks with Renault SA over a possible alliance with GM to help bail out their Detroit rival.

Under the plans reported Sunday, Toyota also expects to raise production for the first time above 1 million vehicles in Asia, excluding Japan and China. That goal will be achieved by bringing online its third factory in Thailand, the Nihon Keizai reported.

In China, the automaker aims to quadruple production from 2005 levels to 600,000, it said.

Domestic production is seen rising to 4.15 million vehicles by 2008, bringing Toyota's global output to 9.1 million.

Toyota officials were not available for comment Sunday. But Toyota's robust earnings and sales have put it on track to surpass General Motors as the world's No. 1, analysts say. The only question is when.

GM, which lost $10.6 billion last year, launched a major restructuring in November 2005 that called for closing 12 plants by 2008, slashing its work force, reducing capacity and cutting costs. About 34,000 hourly workers have accepted buyouts or early retirement offers that were extended earlier this year, and the company cut 2,000 salaried workers.

According to figures released by GM earlier this month, the American automaker produced 9.05 million autos worldwide in 2005. Toyota produced 8.23 million worldwide that year.

Since being overtaken by Toyota in 2003, Ford is meanwhile falling farther behind.

Friday's cuts by Ford bring its total plant closures to 16, adding to 14 plants announced in a previous restructuring. Ford also said it would complete cuts of about 30,000 hourly jobs by the end of the 2008, four years ahead of its previous target.

That announcement coincided with more bad news from DaimlerChrysler, which said Friday its Chrysler division will make additional production cuts in the third and fourth quarters to reduce dealer inventories.

The Big Three, which rely more on light trucks for profits than their foreign competitors, have been hurt by declining sales of pickups as customers switch to more fuel-efficient vehicles. They are also struggling with the need to reduce so-called "legacy costs" of big pay and benefits packages for workers and retirees.

Despite its ambitious outlook, however, even Toyota recognizes no automaker is invincible.

Last month, Toyota President Katsuaki Watanabe warned that his company could delay some new models as it tries to improve its quality control amid a spate of recalls. The glitches were partly due to efforts to cut costs by using the same parts across different models, but could do lasting damage to Toyota's reputation for reliability.

Japanese authorities have launched an investigation into three Toyota officials suspected of failing to do anything about a faulty steering part, which may have caused a 2004 accident that injured five people.

And the U.S. government also has opened an investigation of 2004-2005 Toyota Sienna minivans after receiving complaints the liftgate had failed, causing the hatchback to close on motorists. In China, authorities recently said Toyota will recall 20,069 Crown sedans made there because of defective rubber strips in the windshields.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Toyota takes aim at U.S. rivals


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