The soaring Australia dollar and the potential of lower import tariffs could threaten Toyota's long-term production plans Down Under.

That's the not altogether surprising news from the carmaking superpower's international head, Tokuichi Uranishi.

Uranishi, who leads Toyota's non-Japanese planning and production said last night in Tokyo that the strong Australian dollar and the scheduled 2010 reduction of new car import tariffs from 10 to five per cent were a "very serious problem" for the company's Australia production operations.

Speaking at Toyota's traditional press gathering at the close of the Tokyo Motor Show's press preview, Uranishi was grilled by the Australian motoring media on the likelihood of the carmaker building hybrid models in Australia. The Global Planning Chief's responses not only effectively ruled out a hybrid model being built locally, however, they also painted an altogether shakier picture -- even for the production of conventionally powered vehicles Down Under.

Indeed, while Uranishi is upbeat about the introduction of more imported hybrid models into Australia -- including a hybrid Camry "this generation", he effectively killed any hopes of production of a  third model line, hybrid or otherwise, at Toyota's Altona (Vic) production plant.

 "Frankly speaking if your government will reduce import duty, definitely export business [to Australia] will be more economical than local production," Uranishi said. Then adding the double-edged sword: "Export business is also suffering seriously from the very strong Australian dollar. It's a very serious problem for us -- for the [Australia] export business."

Around 90,000 Camrys and Aurions are expected to be exported this year -- against local consumption of around 50,000 units -- so Toyota's Altona plant relies heavily on profitable export sales. With Camry built in plants located in the USA, Japan and Thailand -- which is pushing to add Camry Hybrid production -- other operations are queuing up to displace the Australian operation.

"We have lots of alternatives," Uranishi said. "We are doing business; therefore we have to seriously compare which is the most economical way. If import duty will be reduced further, and with the dollar, local production will be getting very tough."

Uranishi said Australia "very much" needed a new Car Plan. He stated, however, it needed to be more than a tariff agenda and must address the whole spectrum of production activities.

"The simply reduction of import duty cannot realise the stronger competitiveness of an industry. Auto industry is about assembly. Car manufacturer [alone] cannot improve everything because we buy almost 70 per cent [of the value of the car components] from outside suppliers. Therefore it is essential to build a very strong supplier network," Uranishi said.

According to Uranishi, Toyota will push for the current 10 per cent tariff level to be maintained (more here).

"Toyota loves free trade, but at the same time once we build an [car manufacturing] operation we have to protect that operation. It is a dilemma. Once we start [manufacturing] we definitely want to keep [that plant operational] but it depends on [government] policy."

"I want to keep our operation in Australia, but the surrounding business condition should be within a reasonable range. We are suffering seriously from the current exchange rate."

"Considering the competitiveness and cost comparison minimum tariff should be [maintained at] 10 per cent," Uranishi said.

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