Toyota Motor Corp., Asia’s biggest automaker, said it will end production of its Highlander sport-utility vehicles in Japan, consolidating assembly of the model in Indiana to blunt the impact of the yen’s rise on earnings.
Toyota plans to invest $400 million to expand capacity at its Princeton plant in southwest Indiana and add 400 jobs by next year. The plan will produce an additional 50,000 units a year, including the gasoline-electric version of the Highlander, Toyota said Wednesday afternoon.
The project “allows for better utilization of the Indiana plant, and will help Toyota capitalize on the improving North American and global auto market,” Steve St. Angelo, Toyota’s executive vice president for North American engineering and manufacturing, said in a prepared statement.
The Indiana Economic Development Corp. said it has offered Toyota Motor Manufacturing Indiana Inc. up to $2.7 million in tax credits and up to $200,000 in training grants, based on the company's job-creation plans. The IEDC emphasized that the company cannot claim the incentives until it hires Hoosiers.
Gibson County will consider additional incentives at the request of the Gibson County Economic Development Corporation.
Toyota employs 4,800 associates, of which 4,000 are Hoosiers, in Princeton, about 150 miles from Indianapolis. The plant builds the Highlander, Sequoia full-size SUV and Sienna minivan, the IEDC said in an announcement.
Toyota, along with Japan-based Honda Motor Co. and Nissan Motor Co., is shifting auto production out of Japan to counter the yen’s 7.3-percent rise against the U.S. dollar in the past year through Tuesday. Toyota this week added a second shift at its Mississippi plant to cut Corolla imports from Japan; Nissan is spending $2 billion on a Mexican factory intended to be an export auto base; and Honda also plans to make small cars in Mexico and its top-of-line Acura NSX supercar in Ohio.
Highlanders will be exported from Indiana to markets including Russia and Australia after expansion of the plant is completed next year, the company said.
Toyota’s plant in Kyushu, Japan, will stop producing the model by late next year. Most Highlanders will be made in the U.S. with limited production of the SUV in China for sale only that market, the automaker said.
The announcement is “great news for this region, for our American customers, and for the U.S economy because every auto job creates 3-1/2 ‘spin-off’ jobs that support those workers,” Yoshimi Inaba, Toyota’s chief operating officer for North America, said in prepared remarks at the Economic Club of Chicago lunch Wednesday at the Chicago Auto Show.
“Our exports of ‘made-in-America’ products to 21 countries have topped 100,000 vehicles, and we’ve just begun exporting American Camry sedans and Sienna minivans to South Korea,” Inaba said.