The stock of Toyota Motor Corp (ADR) (NYSE:TM) closed at $123.68 losing 0.18% in yesterday’s trading session. Toyota is under pressure to make a decision next quarter regarding the exact location of the plant it will be setting up together with MAZDA MOTOR CORP (OTCMKTS:MZDAY).
The chief executive of Toyota North America, Jim Lentz, while speaking to a number of news reporters said that to this point the final decision hasn’t yet been made. Mazda and Toyota’s plan to set up a new U.S. factory happens to be a broader wave of investment in North American production capacity by the Asian and European automakers and there has been much speculation that the U.S. vehicle demand is hitting a plateau. It is surprising that despite this increased vehicle-making capacity continues to be witnessed.
People familiar with the matter have disclosed that the new factory will be part and parcel of a wider realignment of Toyota’s production and supply chain. If everything moves according to plan, the new plant might soon be setting up an SUV for Mazda as well as the Corolla compact cars for Toyota.
The Canadian plant at the moment dedicates its efforts and resources in producing Corollas and it recently released a statement outlining that it had plans underway to build more SUVs. Toyota has also disclosed its plan to set up a factory in Guanajuato and this will focus on building the Tacoma pickup trucks. This is a strategy targeted at freeing up Toyota’s existing factory in San Antonio and eventually the company will be able to proceed with its plan of building more of the Tundra large pickups.
Lentz said, “Toyota’s production strategy for North America could be disrupted if negotiations among the United States, Mexico and Canada to amend the North American Free Trade Agreement fail, and U.S. President Donald Trump decide to exit the trade pact.”
Lentz has expressed immense optimism saying that he really hopes that the government will end up making the right decision.