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Toyota picks Mississippi for car plant

Toyota Motor Corp, the world's second-largest automaker, plans to build an US$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, said the sources, who declined to be identified before the announcement is made public.

Toyota, trailing only General Motors Corp in global sales, was planning to add the factory to help meet surging US demand with locally made vehicles.

Sales in the US grew 13 percent 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 US$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 10am for a press conference, Smith said. He 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 last year to become the No. 3 automaker in the US as sales surged 13 percent. That included 1.18 million cars and light trucks built in Japan, the most ever brought into the US by any manufacturer.

Toyota, which could surpass GM as the world's biggest automaker as early as this year, increased capital spending by 1.4 percent to a record ¥1.55 trillion (US$12.9 billion) from a year ago to expand production this business year.

Toyota's US market share rose 2.1 points to 15.4 percent last year, 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 -- seen as 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."

Last year, some 46 percent of Toyota, Lexus and Scion brand autos sold in the US were imported from Japan, up from 38.4 percent in 2005 and 37 percent in 2004.
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