Exclusive: Toyota pauses on Mexico expansion to review growth strategy

Mon Sep 15, 2014 5:06pm EDT
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By Norihiko Shirouzu and Maki Shiraki

BEIJING/NAGOYA Japan (Reuters) - Toyota Motor Corp (7203.T: Quote) is reconsidering a move to open a new compact car assembly plant in Mexico after company President Akio Toyoda told planners searching for a site to pause and review its rationale, executives familiar with the matter said.

According to four Toyota and group executives, momentum had been building for a decision this summer on the expansion, with the aim of starting production of the mass market Corolla in Mexico in a few years. But Toyoda then asked the team to "re-review" the project by year’s end, the people said.

"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," one of the executives said, referring to questions Toyoda posed in asking for a comprehensive last-minute re-examination.

The upshot was that a decision on the expansion is unlikely before the start of 2015, two Toyota executives who spoke on condition of anonymity said.

One said Toyota would probably go ahead with the plant, but might scale it down or delay the start of construction.

Toyota already has a pick-up truck plant in the northwestern Mexican state of Baja California, capable of producing 63,000 Tacoma vehicles a year, but does not have any capacity for passenger cars.

A company spokesman said Toyota had not made any decision on a new plant in Mexico.

"We are always evaluating our production capacity in Mexico, and in North America generally, to keep it in line with local market demand, but no such decision has been made at this time," the spokesman said.   Continued...

A worker is reflected next to the emblem of a Toyota Vios sedan at a stockyard of the Toyota Philippines manufacturing plant in Sta Rosa, Laguna, south of Manila August 11, 2014. REUTERS/Erik De Castro