Toyota Sees $2 Billion-a-Year U.S. Spend After Trump Attack

Updated on
  • Trump threatened ‘big border tax’ on Mexico-made Corollas
  • Carmaker shows Camry redesign with its sales title at stake

Toyota's Lentz: We Understand What Trump Wants to Do

Toyota Motor Corp., whose investments in Mexico have drawn criticism from U.S. President-elect Donald Trump, said it plans to invest $10 billion in the U.S. over the next five years, maintaining the pace of spending it established during the last half decade.

Jim Lentz, Toyota’s chief executive officer for North America, outlined the company’s intentions during an interview with Bloomberg Television at the North American International Auto Show in Detroit. The Japanese corporation’s president, Akio Toyoda, also made careful mention of its American investments and employment as he introduced the eighth generation of the Camry, the best-selling U.S. car for 15 years running.

Since his election Trump has pressured U.S. and foreign companies to refrain from producing goods in Mexico intended for the U.S. market. Trump last week criticized an announcement Toyota made 20 months earlier that it would build a Mexico factory to assemble Corolla compacts beginning from 2019, saying in a tweet that the company should build the plant in the U.S. or pay a “big border tax.” He complimented Fiat Chrysler Automobiles NV and Ford Motor Co. on Monday through his Twitter account for announcing new investments in the U.S.

“An indication of border tax is an effective arm-twisting move by Trump,” Deepesh Rathore, director at Emerging Markets Automotive Advisors in London, said before Trump’s latest tweets on Fiat and Ford. “Already, Ford has curtailed some of its Mexico plans and other carmakers are bound to follow.”

Mexico Plans

Toyota broke ground last month on the plant in Apaseo el Grande, Guanajuato, which will add capacity for the model without leading to decreased production or employment in the U.S. The Toyota City, Japan-based automaker already makes Corollas at a plant in Mississippi. The company said last week it’s made $21.9 billion in direct investment in the U.S. and pointed to its 10 factory sites, 1,500 dealerships and 136,000 employees in the country.

Fiat Chrysler said on Sunday that it would invest $1 billion to build three new Jeep models in the U.S. as well as a Ram heavy-duty pickup that’s now produced in Mexico. Ford last week canceled plans to build a $1.6 billion factory in Mexico to manufacture its Focus compact car and said it would assemble the vehicle at a different factory in that country instead. The company said Monday it will build Ranger pickups and Bronco sport-utility vehicles at a Michigan plant that previously assembled the Focus.

At the Detroit show on Monday, Toyoda introduced a redesigned version of its Camry sedan that will go on sale later this year. The new arrival is intended to bolster slipping demand for the vehicle, whose 2016 sales fell 9.2 percent to 388,616 vehicles.

New Camry

“Some people call the Camry boring, like a really nice refrigerator,’’ Bob Carter, the company’s U.S. sales chief, told reporters prior to today’s announcement. The new version is the “most emotional and exciting vehicle I’ve ever seen this company do.’’

To defend its Camry franchise, Toyota is mobilizing not just what it considers innovative design and performance, but also aggressive cost-cutting. It’s throwing all this into a midsize sedan segment in which sales and prices are falling, and in which other Asia automakers are also making big investments.

“In a shrinking segment like this, they’re going to have to work a lot harder to entice people,’’ said analyst Jessica Caldwell.

By next year, Honda Motor Co. will arrive with a redesigned Accord, and Hyundai Motor Co. will start selling a new Sonata, said Alan Baum, an independent auto analyst in Bloomfield Township, Michigan. And at the Detroit auto show Monday, Nissan Motor Co. weighed in with a mid-size sedan design that, according to Baum, will arrive as a new Altima in 2019.

Sales of Toyota’s won RAV4 sports utility vehicle jumped 12 percent and may exceed Camry this year, Carter said.

— With assistance by David Westin, P R Sanjai, and Alex Wayne

(Updates with analyst comment in fourth paragraph.)
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