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Toyota has postponed plans to build the next generation of its Prius hybrid in the United States.
The £1bn project to build the Toyota Prius in a newly developed Mississippi factory will be shelved, with no specific timeframe for its completion.
UK sales of the Toyota Prius have remained relatively consistent, with sales up three per cent year-on-year. But worldwide sales have fallen by around 10 per cent, and the US market is down by nearly half; just 8660 units were sold in the US in November, down from 16,737 a year earlier.
The decision to suspend development of the plant comes amid growing uncertainty in the global car market and the continued fall in petrol prices, which has hit demand for electric and hybrid cars. Toyota is also wary of over-supplying what is soon to become a more competitive market with the imminent launch of the Honda Insight hybrid.
Once seen as financially beneficial, the Mississippi Toyota plant has become one of many financial burdens on the Japanese manufacturer. Toyota also has plans for more than a dozen factory projects, including new plants in Brazil and India.
Delays to the production of the new Toyota Prius are unlikely, but Toyota will resent the increased shipping and currency conversion costs associated with importing the Prius from Japan.
Toyota will finish the building work at the Tupelo plant, and has confirmed that staff already employed on the site in administrative and managerial roles will keep their jobs.
Toyota has stated its long-term plans to produce the Prius in the US remain, but that any decision will depend on market conditions.
George Barrow
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