Toyota Motor Corp share price up, to invest in new factories in China, Mexico

The worlds biggest auto manufacturer will spend about $1.3 billion to build two new plants in China and Mexico in a bid to gain a better foothold on the growing Chinese and North American auto markets.

This will be Toyotas first major investment after it opened a new Thai factory in 2013, when it paused plant construction to focus on improving profitability after an expansion policy that led to quality issues and a series of recalls.

The Japanese giant joins major rivals including Volkswagen, GM and Volvo in expanding manufacturing capacity in North America. Sweden-based Volvo recently announced it plans to invest $500 million in a new factory in the United States, while VW said it will pour $1 billion in its Mexican plant to manufacture its Tiguan compact model and GM announced it will build its Chevrolet Cruze in the Latin American country as well.

The Mexican plant, to be based in the central state of Guanajuato, will open in 2019 and will have a maximum capacity of 200 000 vehicles per year, the Japanese business daily Nikkei said. It will operate around the clock and produce the next-generation Corolla sedan for the North American market. This will be the companys first passenger car factory in Mexico.

The Chinese factory will be based in the city of Guangzhou, where Toyota has a joint venture with Guangzhou Automobile Group producing the Yaris subcompact, the Nikkei said. Production will begin in 2018. The plant will add 100 000 vehicles to Toyotas total capacity and will help the company boost its market share by meeting higher demand by the middle class for small cars.

Toyota had set a moratorium on building new factories lasting through March 2016 following efforts to hone profitability. President Akio Toyoda has shifted focus away from rapid expansion to efficient production that would be achieved through a revamped manufacturing plan using more common components among vehicles.

Opening the two plants will boost Toyotas global capacity to 11 million vehicles per year. The company sold 10.23 million units last year, remaining ahead of Volkswagen and General Motors as the worlds top auto manufacturer.

Toyota Motor Corp rose 0.58% on Friday to close in Tokyo at 8 426 yen per share, marking a one-year change of +44.28%. The company is valued at 28.63 trillion yen. According to the Financial Times, the 26 analysts offering 12-month price targets for Toyota Motor Corp have a median target of 9 100 yen, with a high estimate of 10 500 yen and a low estimate of 7 800 yen. The median estimate represents an 8.00% increase from the last price of 8 426 yen.