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Toyota to move assembly of Corollas to new $1 billion plant in Mexico

Toyota announced Wednesday that it would invest $1 billion in a plant in central Mexico, giving the world’s top automaker a bigger footprint in a nation that’s become a magnet for auto manufacturing.

Toyota said the plant in Celaya, in Guanajuato state, would produce up to 200,000 of its best-selling Corollas each year. Production will begin in 2019.

The state-of-the-art plant will be among the first in the world to adopt a new production process that trims costs by sharing more components across vehicle sizes and styles.

President Enrique Peña Nieto said the announcement gave new momentum to an auto industry that was already the world’s seventh largest and the fourth largest exporter of vehicles.

“We hope that this announcement made today in Japan and echoed here permits us to continue consolidating the auto industry in our country,” he said.

In the past two years, many of the world’s major auto manufacturers have announced plans for new plants in Mexico, including Nissan, Mercedes-Benz, BMW and Kia. Some of the plants are for premium model production, not the low-cost compacts that were once the standard for production here.

Mexico foresees auto production climbing from last year’s 3.2 million cars to 5 million in 2020, surpassing India and perhaps even South Korea, Economy Secretary Ildefonso Guajardo Villarreal said.

Jim Lentz, chief executive officer of Toyota North America, said the new plant would employ 2,000 people and be the first designed from the ground up with the automaker’s new production and engineering technology, which it calls Toyota New Global Architecture.

Stephanie Brinley, a senior analyst at IHS Automotive, a market research and industry analysis firm, said Toyota had decided to build the compact Corolla in Mexico not only because of cheaper labor costs but also because Mexico had free-trade accords with 45 countries.

“The Corollas that will be built in Mexico can be shipped to far more locations than the Corollas built in Mississippi,” she said. “Mexican production can go to Europe and it can go to South America.”

The Guanajuato plant marks Toyota’s 15thmanufacturing facility in North America, and the first new plant since 2011.

Toyota builds Tacoma pickups in Mexico’s Baja California, which has produced some 400,000 units since 2004.

Wednesday’s Toyota announcement had long been rumored for Mexico, but the automaker put plans for new plants on hold while it regrouped following vast recall problems that began in 2009 and have involved more than 10 million vehicles. The automaker was also hit by the 2011 earthquake and tsunami that ravaged Japan’s Fukushima area and damaged suppliers of key components.

Corolla production will shift from Toyota’s plant in Cambridge, Ontario, which will focus on higher-priced vehicles such as the Lexus RX 350 and 450h.

Toyota is consolidating production in geographic areas for certain common platforms, with pickup production in San Antonio and Baja California, and compact production in Mississippi and Mexico.

Another big announcement is expected from Ford on Friday, when the Detroit manufacturer is to announce what news reports say is $2.5 billion in new investments to expand a diesel motor plant in Chihuahua state and a transmission plant in Guanajuato.

Guanajuato is becoming a premier cluster for Mexico’s auto industry. With the new announcements, the small state will eventually have plants from Toyota, General Motors, Mazda, Honda, Volkswagen and Ford.

Some 700,000 people are employed in Mexico’s automotive and auto parts industries, commonly earning in a day what auto plant workers in Canada and the United States earn in an hour.

Low wages in manufacturing are one of the reasons domestic sales of new cars are low in Mexico. Most workers cannot afford the cars they assemble.

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