Japan’s Toyota Motor Corp (7203.T) will spend about 150 billion yen ($1.3 billion) to build two new car plants in Mexico and China, two people familiar with plans said, ending a three-year freeze imposed after unchecked growth lumbered the world’s biggest auto maker with too many idle production lines.
Reuters reported in January that plans were in place for new plants in the two countries, awaiting a green light from top management that has now been given. President Akio Toyoda had been cautious about expanding after Toyota was hit by a capacity glut following the global financial crisis.
The new plants will raise Toyota’s annual production capacity by nearly 300,000 cars, the two people said – 200,000 in Mexico and up to 100,000 in China. They declined to be identified because they are not authorized to speak to the media, and said the expansion may be announced formally as early as this month.
The renewed expansion drive by Toyota will put more pressure on rivals such as General Motors Co (GM.N) and Volkswagen AG (VOWG_p.DE), in a global automotive industry still burdened by being able to make more cars than it can sell. The increase in global production capacity of up to 300,000 compares with sales of just over 10 million in 2014.
Immediately after the financial crisis, big carmakers were cautious about adding production capacity. Now, with demand in the United States back at pre-crisis levels and China’s auto market growing, albeit more slowly, expansion is back on the agenda.
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