OEM expects $9.5bn hit
Assembly line at Toyota’s existing Motomachi plant, Japan
Toyota
Toyota has announced plans to acquire land to build a new vehicle manufacturing plant in the Teihoucho area of Toyota City in Aichi Prefecture, Japan.
US tariff changes: Visual map of key trade rates
Recent trade deals have been changing tariff rates for various countries, seeing some drop from previously threatened higher tariffs, while others have increased. Each rate holds consequences for the automotive industry, potentially shifting supply chains and flows as OEMs, suppliers and logistics providers alike attempt to ascertain the most optimal, efficient and cost-effective transport routes and markets.
Anushka Dixit
The plant is due to begin operations in the early 2030s,
according to the OEM, with production models made there to be determined in the
future. The plant is still pending stakeholder cooperation, including that of
the local communities.
The move aims to maintain production capacity of 3m vehicles
in Japan, as well as create a “plant of the future”, the carmaker said.
Interestingly, Toyota is still forging ahead with investment
despite the impact of the US tariffs, which set a rate of 15% on imports from
Japan. It follows Toyota’s profit warning, issued yesterday, where the OEM downgraded
its full-year profit forecast, expecting a ¥1.4tn ($9.5bn) hit from the US
tariffs, considerably more than estimated for GM
($5bn) and Ford ($3bn). In its financial results, Toyota said: “Despite the
challenging external environment, we have continued to make comprehensive
investments as well as improvements such as increasing sales volume, cost
reductions, and expanding value chain profits, thereby minimising negative impacts.”
Japan’s trade deal with the US, although not finalised yet,
includes reducing vehicle imports and automotive parts imports from 27.5% to
15%, which the US president Donald Trump said was “perhaps the largest deal ever
made”.
As part of the deal, Japan pledged to invest $550bn in the
US, which US treasury secretary Scott Bessent said would fund major projects in
the country.
The framework agreement means that Japanese carmakers have
the upper hand by moving cars from Japan directly to the US, rather than
importing from nearshoring countries like Mexico or Canada where, Japanese
carmakers have significant production and where tariffs are at least 25%.
Toyota is among many Japanese carmakers like Nissan, Honda and Mazda that have
facilities in Canada and Mexico.