Toyota Looks to Build Mexico Plant – A New Truck Plant?

Sources say Toyota is currently looking at locations in Mexico to build a new plant. While there is no confirmation on what they will build there, we are speculating it will be a new truck plant. This could be great news for the Tundra.

With a maxed out San Antonio plant, Toyota may be looking to build a new plant in Mexico.

A recent AutoNews.com story says two sources have confirmed Toyota is scouting different locations in Mexico to build a new plant. This makes a lot of sense for the automaker since nearly everyone else has a plant in the region. Plus, build costs are low as well as labor costs. Lastly, thanks to the North American Free Trade Act, there is no chicken tax. This last part is incredibly important when thinking about what they will build there.

What makes us believe it will be a truck plant? If you read the tea leaves and remember recent comment (sadly with Toyota being so tight lipped, then you know Toyota has a truck production problem. Basically, they have more demand for both the Tacoma and Tundra than they can build. With a booming truck market and profit-laden trucks, it makes a lot of business sense for Toyota to expand.

Why Mexico and not San Antonio?

But wait says the astute reader. Why doesn’t Toyota just expand the San Antonio plant? This has seemed like the preferred path, yet Toyota executives have publicly said they are leery of making that kind of investment. While yes, building costs may be smaller than Mexico, the increase in labor costs and overhead make it a tougher sell. This is where Mexico comes in.

The truth is Toyota could build a plant in Mexico for a lot less than the San Antonio plant cost and pay lower wages to the workers. And with no chicken tax, they wouldn’t be penalized for importing trucks into the country.

Also, remember we said a “truck” plant. Toyota could build a range of similar platforms and thus spread the cost and risk among different vehicles. For example, Toyota could the Tacoma, Hi-Lux and Fortuner (4Runner like SUV) in one facility. Currently, Toyota has two small facilities in South America that build the Hi-Lux and Fortuner for that market. They could combine production in one new larger facility. Plus, they could streamline the platforms to share parts which would further save money.

Tundra Impact

If the above plan comes to fruition, it would free the Tundra to expand production and possibly offer new variants. Yes, that’s right diesel and HD fans, the day you have been clamoring for could arrive.

The truth is that Toyota has wanted to expand the Tundra offerings for years. They realize the benefits of having a diesel and a HD truck from a product assortment thinking to offering more fleet truck options.

Unfortunately, we have nothing but speculation to go on at this point and it will take several years for a new plant to be built and come online. However, if it does, Toyota could move from small truck player to a major force.