* U.S. exec: Toyota unlikely to 'fractionalize' Lexus output
* Sees no reason yet to boost Prius capacity
* Toyota redesigning Lexus vehicles
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 create 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," Toyota
President Akio Toyoda said at 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.
In an interview, Jim Lentz, head of Toyota's North American
operations, predicted economic growth of about 2 percent,
similar to 2012.
Toyota was offered $146.5 million worth of tax breaks from
Kentucky to add production capacity at the Georgetown plant, a
source previously said.
"If you look at Kentucky, it's our oldest plant," Lentz
said, when asked if the ES could be made in any other Toyota
plant in North America.
"We have the most experienced team members working in that
plant," he said. "So I think it will be Kentucky. I don't see us
fractionalizing Lexus in different plants."
Toyoda declined to comment on about whether other models,
including the Prius, could be built in the U.S. market.
"In the case of Prius, if I look at the sum of global demand
and the sum of global supply, right now they are in sync," Lentz
said. "There is really no compelling reason to build more
capacity until we can forecast more demand."
Lexus launched the brand in the 1990s and was embraced by
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."
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.
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
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 it is moving production to avoid
problems such as the supply disruptions it faced in March 2011
when an earthquake and tsunami hit Japan. Converting overseas
profits back into the yen has pinched profits. The yen's decline
since last year has not affected that strategy.