Toyota Eyes Fifth North American Assembly Plant

Building on Toyota Motor Corp.’s successful factories in the U.S. and Canada and seeking to increase its global market share to 15%, Toyota’s chairman said Monday that Japan’s largest auto maker is considering building a fifth assembly plant in North America.

“The population in North America is growing and therefore vehicle demand will grow,” Chairman Hiroshi Okuda told reporters in Tokyo. “If we want to keep our market share at around 10%, then a new plant will be necessary.”

Okuda would not say where Toyota is considering putting another factory or what vehicles it would build. It already has assembly plants in Kentucky, Indiana and Ontario, Canada, along with a plant run jointly with General Motors Corp. in Fremont, Calif.

Toyota, the world’s No. 3 auto maker in terms of volume, is expected to put any new capacity into high-profit-margin pickup trucks, sport utility vehicles or luxury vehicles under its Lexus brand.

Toyota is the third-bestselling brand of cars and trucks in the U.S., after Ford and Chevrolet. With Lexus, it had 10.2% of the U.S. market through August.

The auto maker has said that it intends to increase its global market share from around 10% to 15% sometime after 2010 and that it wants to produce up to 75% of the cars it sells in North America at plants here.

Toyota sold 1.74 million vehicles in the U.S. in 2001 and says it wants to hit 2 million cars and trucks in the coming years.

“We’re studying the possibility for increasing our local production,” said Dan Sieger, a spokesman for Toyota Motor Manufacturing based in Erlanger, Ky. “There are a lot of different factors, but nothing has been decided at this point.”

Industry experts said they would not be surprised if Toyota decides to build a new plant on the continent.

“We certainly can see another Toyota plant in the next few years, what with earnings and volume doing well,” said Michael Flynn, director of the University of Michigan’s automotive think tank.

Whatever vehicles Toyota decides to build at a new plant must fit in with the U.S. government’s mandated gas mileage requirements, known as corporate average fuel economy, or CAFE.

“They need to be careful in the next step about balancing the CAFE fleet between vehicles produced domestically and imports,” Flynn said. “They need to be careful they don’t put a vehicle into North America that creates problems for their import fleet. They’d probably want to bring in a lower-mileage vehicle to build here.”

Joseph Phillippi, head of AutoTrends Consulting in Short Hills, N.J., and a longtime investment bank analyst of the auto industry, said it makes “an enormous amount of sense” for Toyota to build another factory here.

“Demand is strong, and there are two ways to meet that demand: import from Japan, which is somewhat politically incorrect, or produce more here,” Phillippi said. “They have a strong supply base here, so they wouldn’t have to stretch a supply line 8,000 miles long.”

Phillippi said Toyota would be well-advised to produce here the 4Runner sport utility vehicle, whose platform will be the underpinnings of the upcoming Lexus GX 470 SUV. “That would be the most logical next step because it’s a relatively high-volume vehicle,” he said. “They might build 20,000 GX 470s and 80,000 4Runners, and that’s half a factory.”

A “crossover” vehicle that combines attributes of passenger cars and SUVs and which are being planned by most auto makers could be another candidate for U.S. production.

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Times staff writer Terril Yue Jones in Detroit contributed to this report.