Toyota to invest in new factory in Mexico, boost production in China

Japan’s largest carmaker, Toyota Motor Corp., announced a new USD 1 billion factory to be built in the central state of Guanajuato, Mexico. With an annual capacity of 200,000 units, and production to commence in 2019, the Mexican factory will supply North America with compact cars.

The new plant will be the first built from the ground up, under the Toyota New Global Architecture strategy, a new approach to engineering and building vehicles. The Guanajuato site will serve as a model for other Toyota factories around the world.

Toyota plans to move production of its Corolla compact car from a factory in Cambridge, Ontario, Canada to the new site. Thereafter, low-margin, compact cars will be produced in Mexico and at a factory in the southern U.S., whereas higher-margin units will be produced in Canada and the central U.S.

The company also announced a JPY 52.5 billion (USD 439.6 million) investment to add a new facility and a third line at its joint venture factory in Guangzhou in southern China. Production could start towards the end of 2017 and will boost capacity at the plant by 100,000 units.

The announcements herald the end of a three-year investment hiatus in new facilities, after a series of expensive massive recalls for the company. Toyota said it is now using about 90% of its total manufacturing capacity, compared with 70% in 2009, during the global recession, which is one of the reasons for the announcement.

Boosted by a weaker yen, Toyota also is expected to report a record operating profit of JPY 2.7 trillion (USD 22 billion) for the fiscal year ending March 2015.