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Toyota Halts Expansion Freeze, Eyes Two Assembly Plants

| Jan 18, 2015 08:09 AM EST

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After ending a three-year freeze on building vehicle assembly plants, Toyota Motor Corp. is planning on opening additional two factories to the current eight in China, four executives familiar with the company's plans said.

The initial feasibility studies in China and Mexico have already been completed and they are just waiting for a signal to execute the plan, according to the executives.

"We're going to grow again. We will climb the staircase," Jim Lentz, head of Toyota's North American operations, said in an interview. "But it's a different way than in the past. It's not going to be growth for growth's sake."

The Japanese automaker is evaluating plans to build two assembly plants in China, one in the northeastern city of Changchun and another in the southern city of Guangzhou.

Toyota is looking at a site to establish a passenger car plant in and around the central state of Guanajuato.

"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.

President Akio Toyoda, one of Toyota's top decision-makers, decided to lift the three-year freeze on the new capacity expansion, according to the executives who spoke to Reuters but declined to be identified because they are not authorized to speak about the issue.

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, Toyota spokesman Ryo Sakai said.

The Japanese company has experienced a significant slowdown on its sales growth in China because of a territorial issue between China and Japan, which made consumers turn away from Japanese goods. However, the company still needs to create a capacity in the medium to long term as the demand for automobiles is expected to increase in China, the executives added.

Toyota owns and operates eight assembly lines in China and can produce nearly a million vehicles in a single year.

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