Toyota May Build 2nd Mexico Plant
Japanese auto giant Toyota Motor Corp. is seeking to build a second major auto manufacturing factory in Mexico to add to the Baja California plant that will start construction next month, government officials said.
Top state and federal officials who asked not to be named said the second Mexican factory would make vehicles for the U.S. and Mexican markets, receive $120 million in investment to start and cover a minimum of 375 acres.
Several states are vying for the plant, including Aguascalientes, Jalisco, Guanajuato and San Luis Potosi.
Already home to a giant facility operated by Nissan Motor Co. and Renault, Aguascalientes has high hopes of snagging Toyota.
The project shows that Toyota is serious about supplying the North American market from nearby factories rather than with distant exports. Toyota has the largest U.S. market share--10.3% year to date--of any foreign auto maker and is growing quickly, said Jeff Schuster, an analyst with J.D. Power & Associates in Troy, Mich.
“This is really part of the overall expansion that continues from Toyota in North America,” said Schuster, who is Power’s director of hemispheric forecasting. “Toyota’s plants are running at capacity or close to capacity.”
The factory site, which probably won’t be announced for several months, would be Toyota’s second manufacturing venture in Mexico. The auto maker will break ground next month on a factory southeast of Tijuana on more than 715 acres.
The Baja plant, due to begin operations in 2004, will start by providing parts to a Tacoma truck assembly line at the Fremont, Calif., plant that Toyota co-owns with General Motors Corp. But industry and government officials expect the Baja facility to graduate to full vehicle assembly, probably for pickups.
A Mexican federal official involved in negotiations with Toyota said he expected the auto giant to announce at the groundbreaking that “more than a dozen” auto suppliers will follow Toyota to the Baja site.
Toyota’s Baja facility will bring at least 1,000 jobs to the area and ignite what Baja California officials hope is a higher level of industrial activity to replace the light assembly plants called maquiladoras whose numbers have decreased in the last two years.
Asked about a second Mexico factory, spokeswoman Barbara McDaniel of Toyota Motor Manufacturing North America in Erlanger, Ky., said: “Nothing has been finalized yet. We have been talking about the potential for something additional in Mexico, but nothing is decided at this point.”
The second plant would be located more toward the center of Mexico and closer to principal north-south highway and rail transportation arteries to supply the U.S. and Mexican markets with mainstream models.
Although Toyota’s U.S. market share has been steadily climbing since 1995, sales took a big leap last year with its share of sales rising to 10.15% of all vehicles sold from 9.3% the year before, according to J.D. Power figures. Leading the growth are truck sales.
After announcing the Baja project in January, Toyota called officials of several Mexican states to assure them that “Toyota will choose another site” for a second manufacturing facility, said a top official with the Aguascalientes state government.
In addition to supplying the U.S. market, Toyota also is interested in establishing a strong presence in Mexico’s domestic market, the official said. A recent study by auto consultants A.T. Kearney of Mexico City showed that there is ample room for new-car sales growth, based on income and relatively light ownership levels.
After an absence of more than 20 years, Toyota last month returned to the Mexican new-car market by opening half a dozen dealerships in large cities to sell Camry and Corolla sedans.
In addition to the Fremont plant, Toyota’s North American factories are located in Princeton, Ind.; Cambridge, Canada; and Georgetown, Ky.
