Toyota to Open Three New Plants in China and Mexico after 3 Year Manufacturing Freeze

Published on Author whelihans15

Japanese motor company, Toyota, is ending a three year manufacturing freeze put in place after uninhibited growth left many of their production lines idle. The firm will spend about $1.3 billion to build two new car plants in Mexico and one in China, raising their total annual production capacity by around 300,000 cars, 100,000 per new plant. Following the financial crisis, major carmakers were weary of increasing their production capacity, but with US demand back at pre-crisis levels and China’s growing auto market, focus has returned to growth. Toyota’s expansion will put pressure on rivals General Motors and Volkswagen in a cautious global automotive industry. Motivated by increasing demand for cars in China, the plant will produce primarily small and subcompact cars to appeal to the growing Chinese market. The Chinese plant will be located in Guangzhou, producing 100,000 Yaris subcompact vehicles a year starting in 2018, bringing more jobs and pollution to the Southern coast town, and potential issues such as regarding lack of housing, public healthcare and education for temporary and illegal migrants moving in search of higher wages thanks to the hukou system.


2 Responses to Toyota to Open Three New Plants in China and Mexico after 3 Year Manufacturing Freeze

  1. Are Toyota’s sales in China supply-constrained? Or have they simply been laggards, and hurt in addition by anti-Japanese sentiment (deliberately fostered by the Chinese government for its own political purposes)?

    Note that Japan is investing inside NAFTA despite the weak yen that renders exports from Japan profitable. Toyota clearly believes that in the long run they need to make where they sell, in part because the yen may not always stay weak. In the case of China, high tariffs make production inside China advantageous. In the case of the US, there’s only a 2.5% tariff. (Japan’s tariff is 0%.)

  2. While this is good news for Toyota, I’m sure U.S. manufacturers are not as thrilled. This fairly large expansion into Mexico and China is sure to be profitable. (Especially in China as you pointed out in your post.) Now that Toyota will be (hopefully) increasing it’s sales in China that makes even less space for American cars to be purchased there.