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IHS Global Insight
November 13, 2017
In Brief
334 words
Toyota North America to go ahead with US plant even if NAFTA revised â ' report
Stephanie Brinley

Toyota North America CEO Jim Lentz says the company will continue with its planned US plant, a venture with Mazda, regardless of the outcome of negotiations over the North American Free Trade Agreement (NAFTA), reportsAutomotive News. Lentz also said that if the agreement is changed, the company could move some production capacity. Relative to the potential for the agreement to be cancelled, Lentz is quoted as saying, "Hopefully, that is not going to even be considered. The risk is that if things got that difficult, then manufacturing leaves North America, because an automaker might say that as long as I'm going to pay a chicken tax, I might as well make these in Thailand or somewhere else. I might as well make them in China." Regarding the new US plant a final decision on the location has not been decided Lentz is quoted as saying, "It kills two birds with one stone. I get my pick-up trucks quicker and I find a place to build Corollas at a fairly reasonable cost."

Significance:The NAFTA is an agreement covering trade between Canada, Mexico, and the United States, and is currently being renegotiated. The outcome may have significant impacts on the automotive industry, as the three countries have been integrated to create a regional supply chain (seeNorth America: 10 November 2017:US trade negotiator proposes raising NAFTA regional content requirement to 85% reportandNorth America: 18 October 2017:NAFTA talks to resume in November and extend into first quarter 2018 report). The Toyota-Mazda plant, due in 2020, is planned to build the Toyota Corolla and Mazda sport utility vehicles (SUVs), while the plant has enabled Toyota to dedicate another new plant in Mexico to the Toyota Tacoma pick-up, instead of the Corolla (seeUnited States: 7 August 2017: Toyota, Mazda announce new business allianceandUnited States - Japan - Mexico - China: 16 April 2015: Toyota plans to adjust North American production, invest USD1 bil. in Mexico and USD440 mil. to expand Chinese capacity).
November 13, 2017
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