DETROIT -- Toyota Motor Corp.'s Canadian unit said today it will make an $80 million investment in its Woodstock, Ontario, assembly plant to increase production of its small RAV4 SUV from 150,000 vehicles to 200,000 vehicles annually.
Ray Tanguay, chairman of Toyota's Canadian manufacturing unit, said in a statement the move is a result of strong sales of the RAV4 and a comeback in sales industrywide. About 400 jobs will be created by the expansion, the company said.
While industry sales projections continue to rise, RAV4 sales so far this year have been lackluster, suggesting Toyota may have another motivation for the production boost.
About 13 percent of the RAV4s sold in the United States so far this year were made in Japan where the strong yen makes vehicles exported to the U.S. market less profitable.
Is Toyota planning to shift all production for North America to the Canadian operations?
"As of now we have no plans to shift all production of RAV4 to North America," spokeswoman Carly Schaffner said in an e-mail. "The only thing we are announcing is the boost in production."
Schaffner acknowledged that if demand for the SUV continues to grow in North America, the company would consider such a move.
Toyota sold 22,496 RAV4s in the United States during the first two months of the year -- a 5 percent decrease from the same time last year when it sold 23,758 vehicles. In Canada, Toyota sold 2,914 RAV4s during the first two months, a 14 percent increase over the same period a year ago.
Schaffner said the production increase in Ontario is due largely to having more supplies readily available to build vehicles after the March 11, 2011, earthquake and tsunami in Japan.
"Our entire lineup is seeing normalized inventory," she said. "We're in a good position for strong sales in March and we've seen increases [in month-over-month RAV4 sales] in February and January."
Schaffner said only about 35 percent of the company's global output will come from Japan this year vs. about 53 percent in 2006.
"It's a part of the greater localization strategy," she said of the company's decision to increase RAV4 production in Canada. "Part of our localization strategy is to build cars where we sell them."
Last fall, Toyota announced that its plant in Princeton, Ind., would serve as the only location to assemble the Highlander, removing production by any other plants overseas and arguably reducing export costs amid a rising yen.
