TOKYO -- Toyota Motor Corp.'s decision to consolidate Highlander SUV production for North America at its Indiana plant could be a sign of things to come.
Toyota already has announced a campaign to revamp its global manufacturing footprint and build more cars where it sells them. Shifting production of all Highlanders for the U.S. market to the company's assembly plant in Princeton, Ind., fits the plan perfectly.
Toyota began building the Highlander in Indiana last fall but has continued importing vehicles from Kyushu, Japan. Imports accounted for 6,961 units, a fifth of the 33,763 Highlanders sold this year through May.
The vehicle isn't even sold in Japan, which underlines the problem: Toyota's risky exposure to imports and fluctuating exchange rates. Last year alone, Toyota took a ¥320.0 billion hit ($3.48 billion at current exchange rates) from the yen's climb against both the dollar and the euro.
Atsushi Niimi, executive vice president in charge of global manufacturing, wants a better foreign exchange rate firewall. His strategy calls for weeding out excess capacity in Japan that is geared toward overseas markets and shifting production closer to regional showrooms.
The next big opportunity to overhaul U.S. production might come with the eventual opening of Toyota's mothballed plant in Tupelo, Miss., originally conceived to manufacture Highlanders, starting in 2009. But the opening was put on hold when the economy soured. Now Toyota is not sure what it will build there, or when.
Toyota gave up much of its capacity to manufacture Corollas in North America when it closed its California plant, New United Motor Manufacturing Inc., this year. The Corolla is a possible future model for the Tupelo plant and another way to relieve imports from Japan.