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BRAZIL: New Toyota won't be entry level

By just-auto.com editorial team | 18 July 2008

In a terse 80-word statement, Toyota recently announced the acquisition of land to build a new manufacturing plant in Sorocaba, just 55 miles west of São Paulo City, where a compact model will go into production from 2011 as 2,500 people build 150,000 units a year.

No official word about the model, investment or factory details. The same day, Toyota Brazil president Shozo Hasebe met Brazilian president Lula da Silva and state governor José Serra to confirm the decision.

The first rumours of Toyota's second Brazilian manufacturing plant started in 2002. Two years later news spread about a 10% local market share by 2010 goal, which would place it among the local 'big four'.

In fact, Toyota ranked fifth in 2007 and has slipped to eighth this year with 3% market share. The brand is now maintaining the 10% target with no deadline.

Over the years the Japanese considered 10 states during slow, auction-like negotiations. Toyota and Sorocaba officials have officially met no less than 101 times, newspaper O Estado de S Paulo reported.

Industry gossip said Sorocaba - population 560,000 - won over neighbouring Santa Bárbara D'Oeste because Japanese would enjoy a better social life there.

Officially, the choice was based on logistics and a consolidated supplier base, ZF and Schaeffler among them.

Estimated initial investment is $700m including an engine plant but the chosen model will not be an entry-level car.

There are clear indications of a derivative of the next-generation Yaris, whose architecture would enable production of a less sophisticated and more affordable model for emerging markets. Plans include exports to Latin America and Africa.

Fernando Calmon