Toyota to resume partial output, keeps 2007 goals

TOKYO, July 23 (Reuters) Toyota Motor Corp. said it would resume work at two-thirds of its car assembly lines in Japan on Tuesday after an earthquake cut off supplies of key components to its factories, and it kept its global sales targets unchanged for 2007.

Auto production at Japanese carmakers has virtually ground to a halt after the country's top supplier of piston rings, Riken Corp., was hit by an earthquake on July 16.

Speaking at its annual mid-year news conference, Toyota President Katsuaki Watanabe said on Monday the automaker would lose about 55,000 units of vehicle output after a complete stoppage at all domestic plants through Monday and at 20 of the 31 assembly lines at its 12 group-wide car factories on Tuesday.

Plans for Wednesday and beyond would be decided on Tuesday.

But Watanabe stressed that shutting down factory production was not alarming under the circumstances, and defended Toyota's famed lean manufacturing method as one of its competitive strengths.

''We will gauge how to make up for the lost production in due time,'' Watanabe said. ''What's important is being able to figure out how swiftly we can fix the problem and return to normal.'' Car sales in Japan have declined across the board, but Toyota's domestic factories have been working at full speed to satisfy demand overseas. Toyota exports 60 percent of its Japan-made vehicles.

Watanabe conceded that the domestic market remained tough -- Toyota's sales fell 10 percent in the first half of the year to 826,000 units -- but said he was counting on new car launches and the Tokyo Motor Show in the latter half to jump-start sales.

''We realise that our domestic sales target of 1.72 million units (for 2007) is very challenging, but we've seen some improvement in July and we're not changing our global targets,'' he said.

Toyota in December set a parent-only sales goal of 8.4 million vehicles for 2007 and 9.34 million units for the group, including Daihatsu Motor Co. and Hino Motors Ltd. Both figures represent a 6 percent rise from 2006.

MARGIN GOAL Toyota, which overtook General Motors Corp. as the world's biggest automaker last year, has been boosting its sales volume and profits steadily driven by its popular, fuel-efficient models such as the Camry and Prius sedans.

Management has set a goal of 10 percent operating profit margin, up from 9.3 percent in the business year ended March 31, and Watanabe said the automaker would keep that target for the mid to longer terms despite intensifying competition, the growing popularity of smaller, cheaper cars and the need to step up spending on developing environmental and safety technologies.

''I think it's a good target that (also) works for the mid to long term,'' he said.

Toyota already has the highest profit margin among the world's mass-volume carmakers. Domestic rivals Honda Motor Co.

and Nissan Motor Co. had margins of 7.7 percent and 7.4 percent, respectively, last year.

As part of its safety activities, Toyota announced on Monday it would include side airbags and curtain shield airbags as standard equipment on all new passenger cars going forward.

REUTERS SR DS1501