Toyota ends freeze on new assembly plants

Toyota Motor Corp is ending a three-year freeze on building new vehicle assembly plants and is looking to open two new plants in China and another in Mexico, four executives familiar with the company's plans said.

The Japanese automaker has already completed initial feasibility studies in both China and Mexico, according to the executives, and "the teams are ready to execute," as one of them put it.

Jim Lentz, head of Toyota's North American operations, said that after "a three-year hold" on new capacity investments, the standstill is over for Toyota. Lentz, who spoke on the sidelines of the Detroit auto show, would not comment on specific plans to add production capacity in China or Mexico.

"We're going to grow again. We will climb the staircase," he said. "But it's a different way than in the past. It's not going to be growth for growth's sake."

Toyota's Chinese operations are evaluating plans to build two assembly plants — one in Changchun and Guangzhou where the company already produces cars. In Mexico, Toyota is looking at a site for a passenger car plant in and around the central state of Guanajuato, people familiar with the plans said.

"The only thing we are waiting for is a final green light from the top," said one of the executives who is a senior manager in China. The situation is more or less the same in Mexico, he said.

All four Toyota executives declined to be identified because they are not authorized to speak to reporters.

A renewed expansion drive by Toyota, the world's largest automaker, would put more pressure on rivals, including General Motors Co and Volkswagen AG, in a global automotive market still burdened by excess capacity.

Immediately after the financial crisis, big automakers were cautious about adding production capacity. Now, with demand in the United States back at pre-recession levels and China's auto market growing, albeit more slowly, automakers are announcing more expansion plans.

Toyota's top decision-makers, including President Akio Toyoda, decided earlier this month to lift the three-year freeze on new capacity expansion, people familiar with the decision said. The freeze was supposed to expire at the end of the fiscal year ending in March 2016.

Spokesman Ryo Sakai said Toyota over the past few years has been focusing on squeezing maximum production from the company's existing factories around the world, as well as improving quality.

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