Toyota mulling ways to cut US costs

CHICAGO, Feb 9 (Reuters) Toyota Motor Corp.'s North American president has said the automaker is considering ways to cut US labor costs without reducing wages for workers.

Speaking on the sidelines of a luncheon at the Chicago auto show, Jim Press said the Japanese automaker needs to be more efficient in producing vehicles because rising costs are cutting into profit margins.

Press said Toyota is looking at smaller plants, improved manufacturing processes and fewer parts that require less labor.

The US auto industry, particularly Detroit automakers, is battling rising health-care, labor and commodity costs.

''What we want to do is head off the issues,'' Press said.

In a wide-ranging speech, Press also said industrywide US sales of cars and trucks could top the 16.5 million units forecast for 2007.

''My hunch is that it could be a lot better than (16.5 million),'' he said.

Most industry executives have forecast US auto sales to be flat at best this year, with some calling for total industry volumes as low as 16 million units.

That would be down from 16.55 million sold in 2006, which was itself down 2.2 per cent from the year before.

Fueled by the popularity of fuel-efficient models such as the Camry, Prius and RAV4, sales at Toyota bucked the trend, surging 13 percent last year at the expense of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler, Detroit's traditional Big Three, which suffered falls of 7 to 8 per cent.

Press said the US automakers will recover, adding that they are taking the right steps by reducing production in North America and reinvigorating their vehicle lineups.

He said Toyota's expansion in the United States is part of the automaker's effort to localize manufacturing.

Building vehicles in the market where they are sold helps the company reduce foreign currency exposure, he said.

REUTERS DKS BST0510