(Adds confirmation of Lexus ES production in Kentucky)
TOKYO, April 18 Toyota Motor Corp has
been offered $146.5 million worth of tax breaks from the State
of Kentucky to add production capacity at its Georgetown plant
where, a company source told Reuters on Thursday, it will build
the Lexus ES from 2015.
The offer from the Kentucky Economic Development Finance
Authority in a preliminary approval published on Wednesday comes
as Toyota's president, Akio Toyoda and Jim Lentz, the
manufacturer's head in North America, prepare to make an
announcement on U.S. production on Friday.
The pair will unveil a plan to build the Lexus ES in
Kentucky, the first time the luxury model, currently made only
at Toyota's Kyushu plant, will be fabricated outside Japan, a
Toyota executive said, confirming media reports in Japan about
the production change.
The executive spoke on condition he was not identified
because he was not authorised to talk to the media.
A Toyota spokesman declined to comment.
The Georgetown facility will eventually produce as many ES
cars as Toyota sells in the U.S. and Canada, which last year
added up to 59,000 cars, the source said. The ES hybrid variant
will still be made exclusively in Japan, he added
Expanding output at the Kentucky facility, which is operated
by Toyota Motor Manufacturing Kentucky Inc., would fit with the
automaker's strategy of adding capacity at existing plants
rather than breaking ground at new locations. Toyota had
previously said it would freeze plans for any new plants for the
next three years.
The tax incentives being offered by Kentucky would be spread
over 10 years on an estimated investment of $531 million,
creating 750 new jobs, according to a copy of the preliminary
SOLD IN THE U.S.A.
The luxury ES, which Toyota does not sell in Japan, was the
second most popular Lexus model in the United States in 2012
after the RX SUV, which it has been building in Canada for
When the new ES went on sale last year, Toyota executive
Kazuo Ohara said Toyota was aiming to sell about 10,000 of the
vehicles a month, including 5,000 in the United States and 3,000
in China. Overall, Toyota wants to sell about 500,000 Lexus
vehicles globally in 2013, 23,000 more than last year.
The boost to the Georgetown plant underscores an improvement
in the carmaker's fortunes in the key U.S. market where it has
been buffeted by recalls, litigation and rivals such South
Korea's Hyundai Motor Co aiming to grab its market
share. Toyota's U.S. sales rose 27 percent last year and 9
percent in the first three months of 2013 compared with the same
period last year.
Toyota and other Japanese automakers have been pushing to
increase production of vehicles in the markets where they sell
them to counter a strong yen that had made exporting from Japan
expensive. The yen's decline since late last year has not
changed that strategy.
Toyota's 500,000 vehicle-capacity Kentucky plant makes the
Camry sedan, its best-selling model in the United States, as
well as the Avalon sedan and Venza crossover. It also makes
hybrid variants of the Camry and Avalon, which share the same
platform as the Lexus ES.
(Reporting by Norihiko Shirouzu in SHANGHAI, Kevin Krolicki and
Yoko Kubota in TOKYO; writing by Tim Kelly)