Report: Toyota to slash domestic production by 20%

The free ride is over in Japan as government subsidies near their end, now, anticipating a drop in demand, Toyota plans to slash domestic production by 20 percent.

According to a report based in Toyota's domestic market of Japan, the automaker is planning to reduce the production of vehicles in Japan by a full 20 percent due to the anticipated drop in demand as government subsidies are set to go away.

Japan has provided substantial subsidies - more than $2,500 - for the purchase of "eco friendly" vehicles such as the Prius, but now the government is set to end these subsidies, a move so substantial that Toyota expects demand to drop by roughly 20 percent, according to Kyodo News, via Reuters.

Toyota currently produces 14,000 vehicles each day in Japan, a figure expected to drop to 12,000 units - or possibly less - beginning in October.

Despite the sharp drop in production, Toyota is still expected to maintain its annual production target of 3.2 million vehicles.

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