Report – Toyota plans to restart production expansion, building two new plants in Mexico and China image

Japan’s Toyota Motor Corp, the world’s largest automaker, is ready to invest around 150 billion yen ($1.3 billion) in two new car factories in Mexico and China, ending a production freeze.

The investment is still rumored, being reported by two persons that have knowledge of the company’s plans, and if it pans out it would mean that Toyota has decided to end its self imposed three-year expansion freeze – rapid growth yielded in the past quality problems (the 2010 unintended acceleration recalls) and too many idled production lines when markets around the world slumped. Reuters already reported back in January about the plans of the company for new production facilities in the two regions, with the Mexico and China factories still waiting the go order from top executives. President Akio Toyoda had been weary of further expanding the production capacity of the carmaker after the last global financial crisis.

The two new plants could increase the company’s current capacity by almost 300,000 units annually, according to the sources, with 200,000 vehicles in Mexico and up to 100,000 autos in China. The people declined to be named, but said the announcement could come as early as this month. The expansion strategy could increase the pressure on its closely following rivals, Germany’s Volkswagen AG and America’s General Motors. The global auto industry is still plagued by remnants of the last worldwide recession, and production capacity still exceeds total yearly sales. Last year, Toyota sold a little over 10 million units and with the US back at levels seen before the crisis and the China growth still present, the company seems once more willing to increase its production capacity.