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Toyota to build $830 mln SUV plant in Mississippi

Toyota Motor Corp., the world's second-largest automaker, plans to build an $830 million factory in Mississippi, its eighth North American assembly plant, to meet increasing US demand, two people familiar with the plan said.

The factory, due to open in 2009, will make about 150,000 Highlander sport-utility vehicles a year, the people said. They declined to be identified before the announcement is made public. ToyotaMotor Corp., trailing only General Motors Corp. in global sales, plans to add the factory to help meet surging US demand with locally made vehicles.
Sales in the US grew 13% to 2.54 million last year, faster than Toyota's capacity in the region, kindling fears among company executives about a US political backlash over imports. „Toyota clearly needs more capacity in North America with its level of sales growth,” said Yoshihiro Okumura, a general manager at Chiba-gin Asset Management Co., which manages the equivalent of $365 million in assets in Tokyo.
Mississippi Governor Haley Barbour will announce a „major economic development” today, his spokesman Pete Smith said in an interview. Barbour will be in Tupelo, Mississippi, at 10 a.m. New York time for a press conference, Smith said. Smith declined to discuss details or confirm whether the announcement involved a Toyota factory. Nikkei English news earlier today reported Toyota will open a factory in Mississippi. Dan Sieger, a spokesman for Toyota's North American manufacturing unit, declined to comment on the Nikkei report.

Toyota overtook DaimlerChrysler AG in 2006 to become the No. 3 automaker in the US as sales surged 13%. That included 1.18 million cars and light trucks built in Japan, the most ever brought into the US by any manufacturer. Toyota, which may surpass GM as the world's biggest automaker as early as this year, increased capital spending by 1.4% to a record ¥1.55 trillion from a year ago to expand production this business year.
Toyota's US market share rose 2.1 points to 15.4% in 2006, aided by its Corolla compact car and the Prius gasoline-electric hybrid car, while GM's share fell 1.6 points, and Ford Motor Co.'s dropped by 1.1 point. President Katsuaki Watanabe has lured customers from US automakers with fuel-efficient vehicles in North America, Toyota's most profitable market.

The Highlander, called the Kluger in Japan, is currently only made at Toyota Motor Kyushu Inc. in southern Japan. Toyota annually sells about 150,000 Highlanders in the US and Canada. The model competes with GM's Chevrolet Equinox, Ford's Explorer and Honda Motor Co.'s Pilot SUVs. A plant in Mississippi, a relatively low-cost state, building Highlanders „makes perfect sense,” said Catherine Madden, who forecasts automakers' production plans for Global Insight Inc. in Lexington, Massachusetts.
„Highlander has been screaming to come over to North America since that's where most are sold,” Madden said. „They also need another plant to address their rising imports, which have gotten quite high.” In 2006, some 46% of Toyota, Lexus and Scion brand autos sold in the US were imported from Japan, up from 38.4% in 2005 and 37% in 2004. By comparison, Honda and Nissan Motor Co. each sourced about 80% of the vehicles they sold in the US from North American plants.
News reports last year cited Tupelo among the sites being considered by Toyota City, Japan-based Toyota, along with Marion, Arkansas, and Chattanooga, Tennessee. Tupelo is about halfway between Memphis, Tennessee, and Birmingham, Alabama, in a region that's attracted numerous auto-assembly and parts factories over the past decade. The Tupelo area includes a 1,700-acre property for industrial development.

Many Asian automakers have set up their factories in the southern US due to lower labor cost and as its suppliers are well established in the region. Nissan, Japan's third-largest automaker, operates the only auto plant in Mississippi, a factory in Canton that makes Titan pickups, Armada and Infiniti QX-56 SUVs, Altima sedans and Quest minivans.
The state lost a bid last year for a new Kia Motors Corp. plant that went to Georgia. Honda, Japan's No. 2 automaker, operates factories in Alabama and Ohio and will open one in Indiana. Hyundai Motor Co., South Korea's biggest automaker, has a plant in Alabama. Toyota last year opened its sixth North American auto plant in San Antonio and is building its seventh in Woodstock, Ontario.
The company has said it plans to be able to build 2 million vehicles a year in North America by 2008, up from about 1.5 million in 2006. Toyota shares, which have risen one-third in value in the past 12 months, gained 0.6% to ¥8,340 in Tokyo. (Bloomberg)