Toyota Motor Corp will be shifting the production of its Tacoma pick-up truck from the United States to Mexico. The Japanese carmaker said that the decision is part of its production restructuring. However, the company will be producing its Seuquoia SUV at the United States plant.
The decision definitely makes sense for Toyota given the growing demand for SUVs in the United States. At the same time, the decision to move the production of Tacoma out of the United States might make the company vulnerable to political heat. The company had earlier faced criticism from US President Donald Trump for its Mexican manufacturing.
Toyota realigns production
Toyota said that it will shift the production of the mid-size Tacoma pickup from its San Antonio factory in Texas to Mexico. The San Antonio factory will now produce its Seuquoia SUV, which so far was being produced at the company's facility in Princeton, Indiana. With this move, Toyota will put an end to the production of Seuquoia SUV in its Indiana plant by 2022. The company plans to end Tacoma's production in Texas by end 2021.
The largest Japanese carmaker also said that the Indiana facility will focus more on the production of mid-size SUVs and minivans. The Princeton plant recently got an investment of $700 million and 150 workers to boost production of the redesigned Highlander SUV and Sienna minivan.
That said, the company cleared that the production realignment won't affect any direct jobs at its plants in Indiana and Texas. Toyota has been producing the Tacoma pickup trucks at its Mexico plant since 2004. It now plans to increase the production of the Tacoma trucks 266,000 annually. Tacoma is one of the best-selling pickups in the United States also, with the company selling 249,000 units in 2019.
Is it a wise decision?
From Toyota's point of view shifting the production of Tacoma to Mexico makes sense. The Mexico facility already produces the pickup truck, while the Seuquoia SUV too has high demand in the United States. Toyota said that the production moves were in a bid to "improve its operational speed and competitiveness in North America".
Toyota has been aggressively investing in the US. Since 2016, the company has invested $7.1 billion and has plans of pumping in $5.9 billion through 2021. However, the decision to move Tacoma's production to Mexico may also make Toyota vulnerable to political heat. Trump had time and slammed companies for moving production out of the United States.
In fact, Toyota too was slammed by Trump just after his election to president for its Mexican manufacturing. Not only Toyota, other automakers like General Mors too was slammed by Trump for closing down its plant in Ohio.