Toyota (TM) is planing to sharply cut its SUV and pick-up production in the US. It can see the writing on the wall as well as anyone. Don’t build what you cannot sell.

But, Toyota is doing something much more important as its reorganizes its system for building cars in the US. It will ramp up production of its wildly popular Prius hybrid. The car is in extremely short supply as desperate consumers try to find cars that use less gas.

Toyota will manage all of this by taking its huge plant in Mississippi and converting it away from SUV production. According to The Wall Street Journal, "sometime in 2010, the company will produce there the Prius, a fuel-sipping, gasoline-electric hybrid that can easily go 40 miles on a gallon of gas".

The news is good for Toyota and especially bad for US car companies. GM (GM), Ford (F), and Chrysler are trying to get their own fuel-efficient sedans to market.

Detroit has probably gotten some benefit from the Prius shortage. At least there was some chance that customers would look beyond the Toyota showroom if there was no Prius to be found. With increased production, that problem may go away.

And, that should reduce foot traffic even more to dealers selling US cars.

Douglas A. McIntyre

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