Akio Toyoda, president of Toyota Motor Corp., at a news conference in New… (Scott Eells, Bloomberg )
Toyota Motor Co. plans to build Lexus cars in the U.S. when it completes an expansion of the factory in Kentucky where it makes the Camry and Avalon sedans.
Toyota said Friday it will shift production of the Lexus ES 350 from a factory in Kyushu, Japan, to the Georgetown, Ky., complex, a move that will create about 750 new jobs at the plant. The automaker will invest $360 million in the factory and also receive $146.5 million in tax incentives from the Kentucky Economic Development Finance Authority.
“It is fitting that the first country to build the ES outside of Japan is the United States because this is home for Lexus,” said Akio Toyoda, Toyota’s president. “It is where the brand was founded and it is still the biggest market for our luxury brand.”
The ES is Lexus’ bestselling sedan, with about 56,000 sold in the U.S. last year.
Lexus is primarily a U.S. brand but its vehicles are mostly made in Japan. Toyota produces the Lexus RX 350 crossover in Canada but has not previously built Lexus vehicles in the U.S.
“The move will primarily serve to allow Toyota to minimize currency risk while at the same time improving their image in the U.S. by adding 750 jobs at a time when job growth has disappointed,” said Alec Gutierrez, an analyst with auto information company Kelley Blue Book.
“It seems as though Toyota is finally loosening the reins by allowing both design and production to take place outside of Japan and within the markets where these vehicles are ultimately being sold,” Gutierrez said.
Toyota said the production shift is part of its move to give more autonomy to its business units outside of Japan.
Last month, the automaker handed control of all of its North American operations, including manufacturing and vehicle development, to James Lentz, the Torrance-based executive who headed Toyota's sales and marketing in the U.S. Additionally it named Mark Templin, who ran Lexus U.S.A., the executive vice president of Lexus International.
Toyota said Friday that it has changed its management structure “to provide regional managers with more local control and a streamlined decision-making structure to help the company deliver superior customer-focused products and services.”
The moves have come after Toyota had to recall millions of vehicles in 2009 and 2010 for pedal, floor mat and acceleration issues. It was also fined by federal safety regulators for not moving fast enough to fix the flaws. The recalls hurt the company’s image and started a market share slide from which it is only now recovering.
Toyota also noted that this latest move to expand the Kentucky factory is part of a larger investment plan for its North American business. Over the past two years, the automaker has announced plans to increase production capacity at its plants in Mississippi, Indiana, West Virginia and Canada, reflecting $2 billion in spending and the creation of 4,000 jobs.
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