The Dollar Slide Isn't The Only Problem Toyota Is Facng

Implications: With Toyota's sales down or flat for the past eight months in the U.S. Toyota is looking to reduce production of its largest models.

Analysis: Toyota Motor Corp. sees annual operating profit cut by 35 billion yen, or $344 million, for every one-yen appreciation against the dollar. Toyota's president told reporters on Thursday it isn't clear if the company could maintain profit growth if the dollar continues to slide, despite cost cuts and other measures.

One of those measures will be the reduction of production of its largest models, the Tundra full-size pickup truck and Sequoia SUV, this spring at its Princeton IN, and San Antonio plants.

Contrary to reports, company spokeswoman Carri Chandler says Toyota has no plans to shift all Tundra production to San Antonio.

Ward's data shows Tundra sales rose 65.6 percent in 2008's first two months, compared to a year-ago, while Sequoia sales grew 14.3 percent in the time frame.

Industry-wide deliveries of large pickups are off 12 percent to-date, and large SUV's are down 21 percent.

Toyota's sales have been down or flat for eight months in the U.S.

"The reason for this is due to market demand," says Chandler. "Adjustments in the rate of production aren't unusual. We're just adjusting to current business conditions.." Toyota doesn't "keep inventory."

Last year, Toyota targeted 200,000 annual sales, but the Tundra ended 2007 a bit short. albeit a 57.9 percent from the year before. The Sequoia is all new for 2008, and Toyota had planned on the model to boost sales of its larger SUV's which slumped last year. The automaker last fall predicted deliveries of 66,000 Sequoias in 2008, triple 2007's tally.

The last time Japan faced a seriously weak dollar was in '94 and '95, when the dollar stayed below the 100-yen level for a year and a half, and reached a historical low of 79.79 yen. That time Japan had more weapons to fight back, this time they don't. Japan's ballooning fiscal deficit makes stimulus packages more difficult.