Toyota will push back by a year the planned opening of a new assembly plant in Mexico, a delay resulting from its decision to shift production for two key models.
The factory in Guanajuato, in central Mexico, was to have produced the popular Toyota Corolla. Instead, it will now build the Tacoma pickup. The Corolla, meanwhile, will move from a Toyota factory in Canada to a new plant Toyota is opening in the United States.
“With the production model change to the Tacoma pickup, the start of production will consequently be in the first half of 2020,” rather than the originally scheduled production launch in 2019, a Toyota spokesman explained. “However, we will make our utmost effort to advance the timing in order to minimize the impact to suppliers and the local community.”
Like many automakers, Toyota has been struggling to figure out the right balance between its various assembly plants, taking into account factors including the slowing overall U.S. market, still-strong demand for light trucks, and declining demand for traditional passenger cars, including the Corolla. Politics have also been thrust into the decision-making process.
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After initially attacking Ford for plans to move U.S. small car production to Mexico, then President-Elect Donald Trump took to Twitter to take on Toyota over its Mexican plans. “Build plant in U.S. or pay big border tax,” he tweeted.
The call for a border tax has fallen silent in recent months, the auto industry among the sharpest critics pushing back and Congress showing little interest in such a move.
Nonetheless, the now-President Trump hailed the announcement earlier this month that Toyota would partner with Mazda to open a new, $1.6 billion assembly plant in the U.S. That factory is expected to produce new electric vehicles for both manufacturers. It is also scheduled to take over production of the Corolla, the latter model currently rolling out of a plant in Canada.
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Production at the new U.S. plant is not scheduled to begin until 2021, however, so some Corollas will be built at a Toyota plant in Mississippi, while others will temporarily be imported from Japan.
The Tacoma, meanwhile, will shift to the Guanajuato plant from another factory in Tijuana.
Toyota says it will maintain hiring plans for the Mexican plant, however. One reason could be the surge in demand for the Tacoma, which saw sales rise 5% in July. That reflects the overall boom in SUV and pickup truck demand in the U.S. market while passenger car sales have been spiraling downward. Sales of the Corolla were off 15% in July, and are down nearly 9% for the first seven months of the year – though Toyota still sells twice as many Corollas as it does the midsize pickups.
Trucks are forecast to continuing gaining ground, even as sedans are expected to lose even more momentum. Significantly, Toyota has sharply ramped up incentives on passenger car models, such as the Corolla, in recent months, while also dumping a growing share of its production into fleets, including low-profit daily rentals. Incentives on its truck models have held relatively steady, however.
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