DETROIT—Opening its purse after a three-year expansion freeze, Toyota Motor Corp. announced plans April 15 to spend nearly $1.5 billion on a new factory in Mexico and a new line in China to support sales growth in key markets and underpin a global overhaul in the way it builds vehicles.
The new facilities will deploy low-cost manufacturing processes and be the first in the world designed and built from the ground up to handle Toyota's new modular platforms.
Together, the expansions will boost Toyota's global capacity by 300,000 vehicles a year, from around 9.8 million units. That will give the world's biggest auto maker more wiggle room on a tight global utilization rate pushing 90 percent. That compares with 70 percent in 2009.
The $1 billion Mexico plant will be in the central state of Guanajuato and make the next-generation Corolla small car. It will open in 2019, with a capacity of 200,000 vehicles a year, and employ 2,000.
The Mexico plant will be Toyota's largest investment in that country to date, and only its second factory there. Currently, Toyota has a plant in Tijuana that builds the midsize Tacoma pickup.
Toyota hasn't set a date for groundbreaking at the Mexico plant, according to a spokesman. The factory is also part of Toyota's work to centralize North American production geographically.
In China, Toyota will invest 52.2 billion yen ($440 million) to add a third line to its plant in Guangzhou. That will start in 2017, adding 100,000 units of capacity, Toyota said in a statement.
The factory blitz is part of a global shift in the auto maker's manufacturing strategy aimed at cutting the resources needed to produce new vehicles by 20 percent. The effort includes developing a new generation of platforms that will underpin half of Toyota's lineup by 2020.
“This strategic re-thinking of how and where we build our products will create new opportunities for our company, our business partners and our team members across the region,” said Jim Lentz, CEO of Toyota North America, in a statement.
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business Latin America.