Toyota Plans $495 Million Engine Factory in Brazil Expansion

Toyota Motor Corp. (7203), Asia’s biggest carmaker, will build an engine factory in Brazil to cater to increasing demand in the world’s fourth-biggest auto market.

Toyota will invest about 1 billion reais ($495 million) in an engine plant in Sao Paulo that should begin production by the second half of 2015, Chief Executive Officer Akio Toyoda told reporters in Brasilia yesterday. The new factory will have a planned capacity of about 200,000 units a year and supply engines for the Etios and Corolla compact cars, according to the company.

Toyota is expanding output in Latin America’s biggest economy as it targets getting half its sales from emerging markets by 2015. The automaker, which currently has two assembly factories in Brazil, will hold a ceremony today to mark the completion of a third plant that will produce the Etios, due to be sold in the country later this year.

The carmaker is targeting a doubling of sales in Brazil to 200,000 vehicles this year, spokesman Joichi Tachikawa said yesterday. The automaker has said it will introduce its Prius hybrid in the country this year.

Toyota joins Nissan Motor Co. (7201) in announcing plans to expand in Brazil. Nissan Chief Executive Officer Carlos Ghosn said last October that the automaker plans to spend 2.6 billion reais on a car plant in Resende.

Brazil’s industrywide auto deliveries rose 13 percent to 3.43 million units last year, according to data compiled by Bloomberg. Gross domestic product grew at an annualized 0.8 percent rate in the first quarter. Industrial output fell 5.5 percent in June from the year before, and retail sales in May fell by 0.8 percent from April, the most in more than three years.

Toyota rose 0.3 percent as of 10:30 a.m. in Tokyo. The benchmark Nikkei 225 Stock Average added 0.4 percent.

To contact the reporters on this story: Maria Luiza Rabello in Brasilia Newsroom at mrabello@bloomberg.net; Anna Mukai in Tokyo at amukai1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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