Toyota plans to spend US$500m to upgrade its Princeton, Indiana, assembly plant in what would be the company's largest such investment this year.

Toyota said in a regulatory filing it would retool Princeton, which currently assembles Sequoia SUVs and Sienna minivans, to build the Highlander, now imported from Japan. The SUV, known as the Kluger in some markets, was originally scheduled to be made in a new plant in Mississippi but those plans were axed when the US market tanked amid the credit crisis.

The plant was completed but not fitted out. Toyota then planned to build the Prius there but halted that project as well and may now build the hybrids at the NUMMI joint venture in California long-term partner GM is about to abandon.

Bloomberg News noted that the budget for retooling Princeton was at least double the $230m Toyota spent adding a Camry sedan assembly line in 2007 to affiliate Fuji Heavy Industries' Subaru plant in Indiana.

It was also nearly as much as the $550m Honda Motor spent building a new plant that opened last year, also in Indiana.

Highlander sales in the US plunged 41% in the first half of this year, the news agency added.

The new Blue Springs, Mississippi, plant originally intended for the Highlander was budgeted at $1.3bn.

Princeton opened in 1998 and has 4,500 employees.