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Toyota to Idle Plants to Scale Back Production

Toyota Motor will idle its plants in Japan for 11 days in February and March to reduce output in the face of steeply declining global vehicle sales, the company announced recently. The Japanese auto giant said the suspension will affect production at all 12 of Toyota's directly operated domestic plants, which include four vehicle assembly plants and also factories that make transmissions, engines, and other parts. The stoppages are in addition to a three-day shutdown this month at these plants that Toyota had already announced.

The move is unusual for a company that just a few months ago seemed unable to keep up with voracious global demand for its fuel-efficient vehicles. Analysts say it proves that even strong players like Toyota have failed to escape the drastic slowdown in the global auto industry.

The news comes on the heels of Toyota’s recent announcement that it expects its first operating loss in 70 years, underscoring how the economic crisis was spreading across the global auto industry. Toyota said it expected an operating loss in its auto operations of 150 billion yen, or $1.7 billion, for the fiscal year ending March 31. That would be the company’s first annual operating loss since 1938, a year after the company was founded, and a huge reversal from the 2.3 trillion yen, or $28 billion, in operating profit earned last year.

Analysts said Toyota’s downward revision, its second in two months, showed that the worst financial crisis since the Great Depression was threatening not just the Big Three but also even relatively healthy automakers in Japan, South Korea, and Europe. Many other companies will also soon be reporting losses.

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