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Is Prius next after Toyota's decision to produce Lexus in U.S.?

April 19, 2013|By Jerry Hirsch
  • Jim Lentz, Toyota's North Amercian CEO, speaks during a news conference in New York, where the automaker disclosed plans to build Lexus ES 350 sedans in Kentucky, the first U.S. production for its luxury brand.
Jim Lentz, Toyota's North Amercian CEO, speaks during a news conference… (Scott Eells / Bloomberg )

Toyota’s announcement Friday that it will start building the Lexus ES 350 at a factory in Georgetown, Ky., is part of a larger policy of moving production of cars to the markets where they are sold that could result in the automaker's Prius hybrid being built in the U.S.

In an interview with The Times, Toyota's North American CEO Jim Lentz said the Prius would be the only major gap in Toyota’s North American production once the Lexus assembly line is up and running in Kentucky.

“If you look at most of the vehicles we sell in the U.S., most have been localized -- from Camry to Corolla to the trucks. If you look at Lexus, the two biggest volume vehicles, the RX is made in Canada and now the ES will be made here,” Lentz said. 

“The only vehicle that is really left out there is the Prius. If you look at global demand and global supply on the Prius, they are in sync,” he said. "There is no need to build more capacity now but at some time more capacity will be needed and we would be raising our hand here.”

The Prius was the bestselling vehicle in California last year. The automaker expects to sell about 250,000 of the hybrids nationally this year.

Lentz also talked about whether it is politically difficult for Toyota to move production from Japan. The ES is now built at a factory in Kyushu, Japan.

“That is a difficult question for me to answer because I am not in the heart of Japan,” he said. “Akio [Toyoda, president of the automaker] has talked about maintaining production of 3 million vehicles in Japan. The ES makes sense to come here because Kyushu will get another product in 2014 that will have volume bigger than the car that is leaving.”

The ES is the bestselling Lexus and accounted for about 56,000 of the brand’s U.S. sales last year.

Lentz said that production of the Lexus will begin in mid-2015, and Toyota expects the factory to turn out about 50,000 annually. It will be the first Lexus built in the U.S.

“It will be built on a dedicated line on the plant. The assembly, paint and weld all will be for just the ES,” Lentz said.

Building cars in each of the markets it operates helps Toyota smooth the negative effects of fluctuating currency exchange rates.

Expansion of the Georgetown, Ky., complex 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.

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