News that Toyota Motor Corp (ADR) (NYSE:TM) has plans to open the company’s first passenger-vehicle manufacture plant has been released.
The giant Automobile Company will release the official detailed report in Mexico. The news about the plant was leaked by two anonymous individuals who have close ties with the company. They however asked not to be mentioned because Toyota has not yet released the official announcement.
Construction of the new plant is expected to cost the Japanese automaker well over $1 billion. The new plant will give the company the capacity to satisfy the annual North American demand for over 200,000 Corolla vehicles.
Company President Akio Toyoda had initially stopped the building of new assembly plants due to over expansion. This was just before the financial crisis that led to the company recording losses in 2009. This was the first time the company had made a loss since the 1050s. Mr. Toyoda announced in an investor meeting that the company was ready to resume with the expansion of new assembly plants.
The company’s push to produce more from the existing manufacturing plants have resulted to Toyota using over 90% of the company’s production capacity. This is an improvement compared to the company’s output of about 70% in 2007. The cost saving innovation incorporated in the company’s manufacturing process has led to a 40% decrease in investment capital requirement for a new firm.
Building new production factories at this time is a good idea for the company because the economy is experiencing some stability. The automobile industry is also growing exponentially, with demand for vehicles with modern technology on the rise. It is, therefore, the right time to build more technologically advanced factories that will be able to feed the current demand.
New automobile technology such as the hybrid system and hydrogen cell engines is pushing for more eco-friendly technologies. Such advancements also play a role in pushing for the setting up of new production plants.
