Toyota Motor has been offered US$146.5m in tax breaks by the state of Kentucky to add production capacity at its Georgetown plant where, a company source told Reuters, it will build the Lexus ES from 2015.
The automaker has advised journalists of a ‘production announcement’ set for 14:30BST in New York on Friday which will be made by president Akio Toyoda and North American region chief Jim Lentz
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The offer from the Kentucky Economic Development Finance Authority was in a preliminary approval published on Wednesday, Reuters said.
An unnamed Toyota executive said the pair would unveil a plan to build the Lexus ES in Kentucky, the first time the luxury model, currently made only at Toyota’s Kyushu plant, will be built outside Japan. The comments confirmed media reports in Japan about the production change.
The Lexus RX for North America is built in Canada.
A Toyota spokesman declined to comment to Reuters.
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By GlobalDataThe Georgetown facility will eventually produce as many ES cars as Toyota sells in the US and Canada which last year added up to 59,000 cars, the news agency’s source said. The ES hybrid variant will still be made exclusively in Japan, he added.
Reuters noted that expanding output at the Kentucky factory would fit with the automaker’s strategy of adding capacity at existing plants rather than breaking ground at new locations. Toyota had previously said it would freeze plans for any new plants for the next three years.
The tax incentives being offered by Kentucky would be spread over 10 years on an estimated investment of $531m, creating 750 new jobs, according to a copy of the preliminary approval.
The ES, which Toyota no longer sells in Japan, was the second most popular Lexus model in the United States in 2012 after the RX which has been built in Canada for several years.
When the new ES went on sale last year, Toyota executive Kazuo Ohara said Toyota was aiming to sell about 10,000 of the vehicles a month, including 5,000 in the United States and 3,000 in China. Overall,Toyota wants to sell about 500,000 Lexus vehicles globally in 2013, 23,000 more than last year.
Toyota’s 500,000 unit Kentucky plant makes the Camry sedan, its best-selling model in the United States, as well as the Avalon sedan and Venza crossover. It also makes hybrid variants of the Camry and Avalon, which share the same platform as the Lexus ES.
Toyota currently produces about 100,000 ES units a year at its Miyata plant in Fukuoka Prefecture, which are shipped mainly to North America, Jiji News said.
