Toyota Plans Lexus SUV Investment for Canadian Plant
(Bloomberg) -- Toyota Motor Corp. plans to begin building two more Lexus SUVs in Canada, according to people familiar with the matter, a major win for the nation’s otherwise-struggling auto sector.
The Japanese automaker will produce the Lexus NX crossover and three-row version of its luxury brand’s top-selling RX sport utility vehicle in Cambridge, Ontario, starting in 2022, according to one of the people. They asked not to be identified ahead of an official announcement the company has said it’s making at the plant on April 29 that will “further re-affirm” its commitment to manufacturing in Canada.
A Toyota Canada spokesman declined to comment.
Toyota is delivering a much-needed boost to Ontario after the blows General Motors Co. and Fiat Chrysler Automobiles NV have dealt to plants in the country since late last year. GM has said it has no future product planned beyond this year for its Chevrolet Impala and Cadillac XTS sedan factory in Oshawa that employed almost 3,000. Fiat Chrysler has said it plans to cut a production shift and about 1,500 workers at its minivan plant in Windsor this fall.
Passenger-vehicle production in Canada is projected to drop by 20 percent this year as GM winds down operations in Oshawa, Fitch Solutions Macro Research said in December. Production in Oshawa fell to about 148,000 vehicles in 2017 from a peak of 940,000 in 2003, a drop of about 85 percent, according to Dennis DesRosiers of DesRosiers Automotive Consultants Inc.
A year ago, Toyota announced it would invest C$1.4 billion ($1.1 billion) to build gasoline and hybrid versions of the RAV4 crossover at its plant in Cambridge, about 100 kilometers (62 miles) west of Toronto. It’s pivoted from that plan somewhat, deciding to instead build the gas-electric RAV4s in Georgetown, Kentucky.
That shift is opening up room in Cambridge for Toyota to build SUVs that, to this point, have only been built in Japan, the people familiar with the company’s plans said. The Ontario factory was built in 1988 and employs more than 8,000, according to the company’s website.
President Donald Trump last month linked Toyota’s announcement of the RAV4-related investment in Georgetown, along with spending on several other U.S. plants, to the U.S.-Mexico-Canada Agreement, or USMCA, the still un-ratified deal intended to replace Nafta.
Jim Lentz, the chief executive officer of Toyota North America, said the decision to further amp up U.S. investment plans last month reflected Toyota’s credo to build cars where they’re sold, as well as increasing U.S. demand for its vehicles. But he also said a new North American trade deal and tariff threats also contributed to the moves.
“I’d be disingenuous if I said we didn’t have an eye on trade,” he said.
The RX is the longtime leading model in Lexus’s lineup, and the NX became the brand’s second-best seller in the U.S. in 2017.
©2019 Bloomberg L.P.