Japanese automaker Toyota Motor Corp. is planning to invest up to $700 million in Brazil to install a new manufacturing unit, Brazilian Trade and Industry Minister Miguel Jorge said yesterday. This is part of an aggressive drive by automakers in emerging markets in the wake of declining sales in developed nations.
Toyota will install the new unit in Sorocaba, a city in Sao Paulo state. The unit will have a capacity to produce 150,000 light vehicles per year and will start its operations in 2011.
The plant is expected to create 2,500 jobs for the local populace.
According to the minister, company regional president Shozo Hasebe in a meeting with Brazilian President Luiz Inacio Lula da Silva unveiled Toyota's investment.
Global automakers are interested in expanding their presence in Brazil to take advantage of record domestic demand.
Surging local demand is being fueled by solid economic growth and economic stability, which has increased household incomes and access to credit. Domestic auto sales hit a record in the first half of 2008, totaling 1.41 million units, up 30 per cent from the same period the year before.
Toyota, Japan's top automaker and No.2 in the world behind General Motors, already has an auto plant in Brazil, which started building Corolla compacts in 1998, and another plant that makes auto parts. The company is buying land for the new unit near the two other plants.
Toyota, a relative minor player in Brazil, sold 72,000 vehicles, mostly Corollas, in the South American country last year, but has seen sales gradually grow. Toyota set up shop in Brazil 50 years ago.
In a separate development, the company' shares fell to the lowest level in almost three years in Tokyo following a report that it will cut this year's sales target.
Toyota declined 40 yen, or 0.9 per cent, to 4,640 yen as of the 3 p.m. close on the Tokyo Stock Exchange. It was the lowest level since 9 September 2005.
Toyota will cut this year's global sales target by 350,000 vehicles to 9.5 million, public broadcaster NHK reported on its Web site, citing unnamed sources. The reported target will still mark growth for Toyota, which sold about 9.4 million vehicles worldwide last year. Toyota reviews such targets in July every year.
US sales at Toyota fell 6.8 per cent in the first half, with trucks dropping 13 per cent, pushing it toward its first annual decline in US sales since 1995.
Last week, Toyota undertook widespread manufacturing changes in the US, where automakers have been battered by the jump in gas prices and worries about an economic slowdown.
Under the plan, Toyota will start producing the Prius in late 2010 at a plant it is building in Blue Springs, Mississippi, instead of the initially planned sports utility vehicle - the first time Toyota will build the popular hybrid in the US. (See: Toyota to build the Prius in the US for the first time)
The company also decided to suspend truck and SUV production, including the Tundra pickup at its San Antonio truck plant and the Sequoia sport utility vehicle at its Princeton, Indiana, plant for three months.