Toyota has paused plans for a new assembly plant in Mexico after company president Akio Toyoda called for a review of the North American market.
Last week it was revealed that the company, the only major carmaker without a significant manufacturing plant in the country, was seeking a suitable site in Mexico to build compact cars.
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However, Reuters reported Toyoda subsequently asked for a “re-review” of the project by year’s end. The news agency cited an unnamed executive as saying: “There’s absolutely no unused capacity lying around anywhere in North America? Installing production capacity to try to trigger growth is the old way that got us in trouble before.”
Toyota said at the beginning of August it was trying to make best use of existing US plants and that suggested memories of having to mothball a new Mississippi plant for about 18 months were still raw.
Insiders told Reuters a decision on expansion in Mexico is unlikely now before the start of 2015 with the likely outcome being a scaled down plan. Toyota already has a pick-up truck plant in the northwestern Mexican state of Baja California, capable of assembling 63,000 Tacoma vehicles a year from knock-down kits.
A Toyota spokesman said the company was always evaluating production capacity in Mexico and in North America to keep it in line with local market demand.
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By GlobalDataToyoda has been wary of adding capacity following the global financial crisis and the massive recall crisis in 2009-10 which he blamed on a blind pursuit of volume and high margins. He has looked to refocus on product and quality, placing the company under a three-year global ban on adding new capacity until the end of 2016.
The company began looking into the expansion in Mexico as rivals have rushed to build manufacturing capacity there, taking advantage of low labour costs and favourable trading agreements with other markets in North and South America.
Toyota will nonetheless still sell Mexican built cars once Mazda starts making an OEM variant of the redesigned 2/Demio at its new Mexican plant for its rival to sell in North America.
