By Dhanya Skariachan
NEW YORK, April 19 Toyota Motor Corp
plans to assemble the Lexus ES 350 sedan at its Kentucky plant
in 2015, marking the first time the Japanese automaker has built
a vehicle from its luxury lineup in the United States.
Toyota said on Friday it will invest $360 million at the
Georgetown factory, which makes the Toyota Camry and other
models. The move will generate 750 new jobs and boost the
plant's production capacity by 10 percent to 550,000 vehicles.
Expanding U.S. production fits in with Toyota's strategy to
make cars in the markets where its customers live. The move also
counters the effect of the strong yen, which has made exporting
from Japan expensive.
"This decision is in line with two key goals," Akio Toyoda,
the president of Toyota, said during a news conference in New
York. "First, to serve our U.S. customers. And second, reduce
the effect of the exchange rate on our customers."
The U.S. market is the world's largest for luxury vehicles.
Lexus launched the brand in the 1990s and was embraced by the
American "baby boomers", but the brand has been struggling to
attract younger buyers.
As a result, Lexus is overhauling the design of its vehicles
to compete with the likes of Hyundai Motor Co. Since
2012, Lexus has been using a pinched-in-the-middle "spindle"
grille on models, including the GS, ES and RX.
"Now as a part of our global expansion, we have to speak to
a broader audience," said Mark Templin, executive vice president
of Lexus. "And what better way to do that than to put a much
stronger and sharper focus on design."
BUILDING WHERE SOLD
Seven out of every 10 vehicles Toyota produces in North
America is sold in the region.
The ES sedan was the second most popular Lexus model in the
United States last year after the RX sport utility vehicle. The
ES accounted for 9.2 percent for entry-level U.S. luxury car
sales in 2012, according to data from Kelley Blue Book.
Currently, the company does not sell the ES in Japan, but
makes the model at a Kyushu plant in southern Japan. That plant
will continue to build the ES and export it to other regions
besides North America.
Toyota will start producing a new model in late 2014 in
Kyushu, the automaker said in a statement, without specifying
the model name.
In New York, Toyoda said moving production to avoid
problems, such as the supply disruptions the company faced in
March 2011 when an earthquake and tsunami in Japan. Converting
overseas profits back into the yen has pinched profits. The
yen's decline since last year has not changed that strategy.
Toyoda declined to comment on about whether other models,
including the Prius, could be built in the U.S. market.
He added Kentucky has become a "very competitive" plant. The
company has been offered $146.5 million worth of tax breaks from
Kentucky to add production capacity at the Georgetown plant, a
source told Reuters on Thursday.