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Toyota Confirms It Will Scale Back Investment in a New Mexican Plant

October 24, 2017

Toyota Motor Corp. Brazil Presents The New Corolla 2018Toyota Motor Corp. Brazil Presents The New Corolla 2018
A Toyota Motor badge is seen on the new 2018 Toyota Corolla in Sao Paulo, Brazil, on March 16, 2017.Victor Moriyama—Bloomberg/Getty Images

Toyota on Tuesday confirmed reports it will scale back investment in a planned plant in Guanajuato, Mexico by 30% to $700 million, and will cut planned production in half to 100,000 vehicles per year.

The decision to shrink the plant does not “change our long-term commitment to Mexico, however, change is necessary in order to secure the long-term viability of our facility and our operations,” Toyota spokesman Scott Vazin said in comments emailed to Reuters.

The automaker had announced its plans to build a $1 billion plant in Mexico in 2015.

In August, Toyota (TM) and Mazda (MAZDA-MOTOR) said they would jointly build a $1.6 billion U.S. assembly plant, with Toyota saying it would build Corolla cars at the new venture rather than in Guanajuato, and switch to building Tacoma pickups in Mexico.

Vazin said the change was not a result of fears that the United States could withdraw from the North American Free Trade Agreement, but came after Toyota went “back to the drawing board on rationalizing our production strategy for North America,” following the Mazda deal.

U.S. President Donald Trump has threatened tariffs to curb auto imports and is working with Republican officials to woo investment in domestic production.