Toyota will build a new SUV rather than a car at the Alabama factory

WASHINGTON (Reuters) – Toyota Motor Corp.7203.T) announced Wednesday the construction of a new SUV in a $ 1.6 billion joint venture assembly plant in Alabama, instead of producing Corolla cars.

The largest Japanese manufacturer announced in January 2018 the construction of the plant in Alabama with Mazda Motor Corp. (7261.T). Toyota, which explained that this change was due to "a growing consumer appetite for light trucks and SUVs," still plans to start production in 2021.

Last week, the company said its sales had dropped 5 percent in the first six months of the Corolla to 152,868, while total Toyota car sales dropped 8 percent. US SUV sales were down only 1% over the same period.

In recent years, US car buyers have been shifting away from cars to crossover vehicles, SUVs and pickup trucks.

Nevertheless, sales in the US auto industry are declining and the new plant is likely to exacerbate overcapacity and put pressure on vehicle prices. Sales of new vehicles in the United States declined 2.2% in the first half of 2019.

Toyota will continue to build Corolla cars at its Mississippi plant. Mazda had previously announced the construction of a new SUV in the joint venture plant, which would assemble up to 300,000 vehicles annually.

The plant is located on a 2,500-acre site about 14 km from Toyota's engine plant in Huntsville, Alabama.

Among the United States, Alabama is already the fifth largest producer of cars and light trucks. The state has more than 150 major automotive suppliers and 57,000 jobs in the automotive manufacturing sector.

In early 2017, then-elected President Donald Trump had criticized Toyota and threatened heavy taxes on the Japanese automaker when it was building its Corolla sedan for the US market in Mexico.

In October 2017, Toyota announced that Corolla's production from Canada would be transferred to the new business rather than to Guanajuato and that it would build Tacoma pickup trucks in Mexico.

Toyota will now rely on its Mississippi plant and Japan for Corolla production, a spokesman said.