The Global Manufacturer
A Toyota logo on a wheel. Harold Cunningham, Getty Images

Toyota to Reduce Investment, Targets for New Plant in Mexico

Political factors weren’t a consideration for Toyota’s decision on Mexico, according to one EVP. Instead, the automaker “could increase investment in future, based on market demand.”

Toyota Motor Corp. cut planned investment by 30% for a factory it’s building in Mexico and halved its production target amid pressure from President Donald Trump for manufacturers to keep more production in the U.S.

Japan’s biggest automaker will reduce investment in the Guanajuato plant to $700 million and trim planned capacity to 100,000 units a year, executive vice president Didier Leroy said at the Tokyo Motor Show on Wednesday. Toyota scaled back plans after deciding to change output to trucks for the plant, scheduled to start production in late 2019, and determining that demand was for a smaller number of units, he said.

Political factors weren’t a consideration for Toyota’s decision on Mexico, Leroy said. The automaker “could increase investment in future, based on market demand,” he said.

The shift by Toyota, which previously announced a $1 billion spending on the Mexico plant, reflects the challenges automakers face to balance political demands with competitive needs. Automakers are among companies that have come under fire from Trump, who has threatened Toyota with a border tax for planning to build a factory in Mexico. The company’s production plans in the U.K. are also in flux as Brexit talks drag on, leaving uncertainty over whether costly trade barriers would be imposed.

“We are not playing any political games to please anybody,” Leroy said, referring to the U.K. and U.S. While Toyota remains committed to its U.K. plant, the company would need to think of how it can stay competitive if there was a trade tax, he said.

In March, the automaker said it planned to upgrade its plant in Burnaston, England, to allow the production of cars on its newest platform. As Brexit talks remained unresolved, Toyota said this month it had “no imminent decisions” on U.K. manufacturing and its stance remained that it wanted a competitive environment.

Toyota has a plant in Tijuana, a city in Mexico’s Baja California state that borders the U.S., building Tacoma pickups. The company and Mazda Motor Corp. agreed in August to jointly build a $1.6 billion U.S. factory, the auto industry’s first new assembly plant to be announced under Trump. The two automakers plan to start producing Corolla compact cars and Mazda crossovers at a shared factory in 2021, creating as many as 4,000 jobs.

By Kevin Buckland and Nao Sano

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