Toyota Waffles On Investing In Mexican Plant When NAFTA Future Is In Doubt

Toyota's surprise plan to build a U.S. factory with Mazda solves several challenges for Japan's biggest automaker but increases risk for a company mostly known for being careful.

On the upside, the joint venture gets Toyota 150,000 Corollas a year with a relatively modest initial investment of $800 million. And it frees up a plant under construction in central Mexico to build the capacity-constrained Tacoma pickup rather than the Corolla as first planned.

It may even buy some good will with President Donald Trump, who has criticized Toyota's expansion in Mexico and just last week implored Japanese automakers to build more cars in the U.S. during a trip to Asia.

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CANADIANCOMMENTS - 11/13/2017 7:06:24 PM

0 Boost

Not exactly. But I am sure Trump will spin it that way and take credit for it. What this story does show is the complexities involved in running a global car company and how uncertainty over trade and a nation's policies regarding it can impact a near billion dollar investment decision. Owning a stake in Mazda now provides another variable as does the balancing act of currencies and profit margins on low priced Corolla's and higher priced Tacoma's. It would still likely make more sense to build the Tacoma's in the USA as they are a higher margin product and could be sold more profitably, unlike the Corolla's which are due to be moved from CDN production to Mexico and replaced with higher value products that can more profitably be made in North America. Time will tell which way Toyota jumps.

wilfred - 11/14/2017 12:49:18 AM

+1 Boost

Just simple economics, gotta keep raising import tax so cars (or anything really) are made in USA! Many Asian countries have ridiculous import tax on cars like 50-100%! What part of “debt” does people not understand? As well as the word “illegal”??