Toyota Says It Will Upgrade Bay Area Plant
Toyota Motor Corp. will upgrade a California factory that it shares with General Motors Corp. to make “better vehicles,” Toyota’s president said Wednesday.
The plant needs to be improved, Katsuaki Watanabe said in an interview. He did not say how much would be spent. The two companies created New United Motor Manufacturing Inc., known as NUMMI, in Fremont, Calif., in 1984 as a joint venture, with each partner owning half.
“We’ve been producing vehicles with GM for more than 20 years at NUMMI, so there are some sections that are getting old,” Watanabe said at Toyota’s head office in Toyota City, Japan. GM and Toyota “are ready to move ahead and decide on the investment, with a goal to make better vehicles,” he said.
Toyota is expanding North American capacity to sustain continued growth in the U.S., its most profitable market. Last month Toyota said its seventh North American assembly plant would be built in Canada, and next year it will open a pickup truck factory in San Antonio. Toyota’s U.S. sales in the first half of the year rose 11% to a record 1.11 million vehicles, and the company hopes to sell at least 2.5 million annually by 2008.
The investment in the Fremont plant may be as much as 16 billion yen ($143 million) over five years, the newspaper Nihon Keizai said Thursday.
Stefan Weinmann, a spokesman for Detroit-based GM, said he wasn’t aware of any plans to update the plant.
The cost of upgrading the factory will be shared by Toyota and GM because it is a “50-50 factory,” Watanabe said.
The plant makes Toyota’s Corolla small car and Tacoma pickup truck as well as GM’s Pontiac Vibe hatchback. Last year, 82% of the 380,554 vehicles that the factory produced were Toyota models. It is the only plant where Toyota vehicles are assembled by United Auto Workers union employees. The factory was reopened in 1984 after GM closed it two years earlier.
Toyota may want to upgrade the factory to build a hybrid version of the Corolla, said Credit Suisse First Boston analyst Koji Endo.
Toyota shares rose 62 cents Thursday to $74.70.
