Toyota bets on South America recovery
Toyota employees commemorate a $14.3 million expansion in Brazil.
TOKYO — Toyota Motor Corp. is investing in design and manufacturing in South America to capitalize on the region’s rebound when it comes.
Toyota is improving its parts plant in Brazil, which opened in 1962 as the company’s first factory built outside Japan. It also has inaugurated a new Applied Research Center at the site and built a product design center — Toyota’s first in Latin America.
The automaker has invested $14.3 million to expand the Brazilian plant in Sao Bernardo do Campo, and commemorated the project on Monday, Aug. 22, at a ceremony attended by Chairman Takeshi Uchiyamada and Toyota’s Latin America CEO, Steve St. Angelo.
St. Angelo wants to lift Toyota to the top tier of players in Latin America from its long-held position as an also-ran in a region traditionally dominated by Ford, General Motors, Volkswagen and Fiat. Part of his strategy has been reorganizing and investing in Toyota’s local operations during the region’s economic downturn so that it can grow quickly when things improve.
The Sao Bernardo do Campo plant makes parts for the Corolla and Etios models and can manufacture connecting rods and crankshafts for export to the United States for assembly in vehicles such as the Camry sedan. It employs 1,400 people on three shifts.
The investment project includes a new Applied Research Center to conduct work on new products, purchasing, supply chain issues, accessory development, regulation compliance and quality assurance.
A separate product design center, the company’s first for the region, will help Toyota better tailor vehicles for local demand, the company said in a release.
Toyota’s campaign is to raise sales in emerging markets where it is trailing rivals. With rapidly expanding populations and a growing middle class, those markets will help determine the auto industry’s future winners, Toyota believes.
But tapping growth in Brazil is a long-term play. Brazil’s economy has been a quagmire and new-vehicle sales have frustrated most automakers. New-car registrations for the first half of 2016 were the lowest in a decade, and 2016 is expected to be the third year of decline, according to PwC Autofacts.
Industrywide vehicle assembly in Brazil could reach 2.1 million in 2016, but the market is weighed down by another 2.1 million units of excess production capacity, PwC Autofacts said in an analyst note. But PwC Autofacts forecasts that production and utilization rates will turn around next year and steadily improve through the end of the decade.