Toyota, the world's leading automobile manufacturing company, is set to build a new factory in Mexico to make compact Corolla sedan units, reports Los Angeles Times.
The company will reportedly spend a whopping $1B for this plant. This project ends the company's three-year hiatus on new investments and the Mexico factory is expected to start its operations in summer 2019, says Reuters.
Why Toyota Chose Mexico
1. Cheaper in Mexico
Reuters, citing reports from Globe and Mail, adds that the reason why the Japanese company opted to invest in Mexico is the lower production costs in the country compared to the costs that are being accumulated in plants currently located at Cambridge and at Woodstock, Ontario. The plants in Canada will reportedly focus on the production of Toyota's more expensive line of vehicles.
The LA Times also states that aside from cheap labor that Central Mexico offers, it also has free trade agreements.
2. Strategic Location
Toyota Motor's decision to build a manufacturing site in Guanajuato can also be linked to the rising car industry in Mexico and the growing customer base in the area, the Dallas Business Journal explains. The location is strategic as it is near suppliers and the Corolla factory in Mississippi.
The Japanese company also has a Tacoma pickup truck factory site in Baja California, Mexico, so the company is already familiar with the country and its workforce, as noted by LA Times.
"Having produced vehicles in this country for more than 13 years, we know that the strength of the workforce and manufacturing capabilities in advanced technology make Central Mexico the right place for our newest facility," Mike Bafan, president of Toyota Motor Manufacturing de Baja California and project leader for the Mexico plant told LA Times.
The Company's Plan
LA Times notes that Toyota North America aims to set the factory in Mexico as a model for other investments such as in Toyota's Cambridge, Canada.
"Our next-generation production facility in Mexico will be a model for the future of global manufacturing and set a new standard for innovation and excellence. Transforming our Canadian vehicle assembly plants is an equally important part of our strategic plan to position the North America region for sustainable long-term growth," said Jim Lentz, chief executive of Toyota North America.
What to Expect
The new Corolla compact model will be released in 2020 featuring the Toyota New Global Architecture (TNGA) which is a "comprehensive approach to achieving sustainable growth by making ever-better vehicles more efficiently," says USA Today.
Lentz told the outlet that the company's innovative TNGA will make the compact model more competitive in terms of price and looks. He added that the sedan will be "better looking" than the latest one in the market and described it further as "a little bit tall and not very sleek," notes the outlet.
The TNGA architecture will produce an automobile that has "a lower center of gravity, better ride and handling, lighter weight for better fuel efficiency," Lentz also disclosed.
