Toyota snubs Britain as choice for third car factory

THE JAPANESE car manufacturer Toyota is planning to build its third European assembly plant outside Britain but there could be consolation for the UK in the shape of a doubling of production at its Deeside engine plant in North Wales.

Executives from Toyota, the biggest carmaker in Japan and the third biggest in the world, said yesterday that sites in Poland, Hungary and the Czech Republic were being examined as potential locations for a new car factory.

Another possibility is to expand Toyota's new plant at Valenciennes in northern France, which will start production of a new small car, the Yaris, in 2001.

Toyota denied that its plans were being influenced by the fact that Britain was outside the new euro zone, pointing out that production at its Burnaston plant in Derbyshire would rise to 200,000 cars this year.

But Juan Jose Diaz Ruiz, executive vice-president of sales and marketing for Toyota Motor Europe, said: "Commonsense says we like to plan long- term and if there is one currency across Europe it makes it easier for us to plan."

France was selected for Toyota's second car plant because the biggest market for small cars is in southern European countries such as Spain and Italy.

Sites in eastern and central Europe are now being examined for the third plant because those are the regions where the biggest growth in demand is forecast to take place.

Toyota plans to equip all the cars it builds in Europe with engines from the Deeside plant. This means that production at Deeside will rise to 200,000 by the end of this year from 108,000 in 1998.

But it will double again to 400,000 a year once the Valenciennes factory is fully operational. This will create about 200 jobs on top of the 3,200 that Toyota already employs at Burnaston and Deeside.

Toyota is also planning to cut the size of its 3,400-strong European dealer network by up to 25 per cent. This would reduce the number of dealerships by around 850.

In the UK Toyota has 240 Toyota dealerships and 55 dealerships selling the upmarket Lexus range.

Following its success in Europe last year, when Toyota's market share exceeded 3 per cent for the first time, the company has set itself the target of becoming one of Europe's five biggest car sellers in the next six years.

Toyota aims to sell 600,000 cars in 1999 and 800,000 in 2005, giving it a 5 per cent market share. This year it is launching five new models and eight new engines in Europe.

Akira Imai, president of marketing and engineering for Toyota Motor Europe, said the company had no plans to merge with BMW or any other Western carmakers, even though Toyota's financial position is strong.

In the six months to the end of last September it made profits of Y403bn (pounds 2.1bn), on sales of Y6.2 trillion.