Toyota cuts capacity, a sign of things to come


Toyota (TM) will cut its manufacturing capacity around the world by one million vehicles a year, a sign that the largest auto company does not see a full recovery of the industry on the horizon. The decision is a smart financial one. It will allow the Japanese firm to increase the productivity of the plants it does keep open.

The Wall Street Journal reports that Toyota has the ability to make 10 million cars, but will only build 6.68 million in 2009. Toyota's decision could improve margins, but it may also mean a large number of lay-offs.