Toyota to Build Hybrid Parts Plant in Japan

by : Lauren Woods

The Toyota Motor Corp. said last Friday that it plans to build a new factory in Fukuoka in southwestern Japan to produce components for gas-electric hybrid vehicles. Toyota, which leads the market in hybrid sales, said it plans to acquire about 340,000 square meters of land there and put production lines for hybrid parts together from other plants.

Toyota spokeswoman Yurika Motoyoshi said details, including the size of the investment and timing, are still unknown. The Nikkei, Japanese daily, earlier reported that the automaker would likely invest tens of billions of yen.

The Japanese auto giant targets to sell 430,000 units of hybrid vehicles worldwide this year. The figure is up by 37 percent from that of last year. The automaker also has said that it aims to boost domestic production of the popular Prius hybrid cars by 40 percent to 280,000 units this year.

The Toyota Prius, the first mass-produced and marketed hybrid car, went on sale in 1997 in Japan and in 2001 worldwide. In the United States, the Prius initially attracted purchasers interested in the vehicle's low particulate emissions, advanced technology, and high fuel economy. The benefits are boosted by , engines and other auto accessories.

Last year, the demand for the Prius increased because of various reasons that include the rising price of gas, tax credits provided by the federal government lowered the end-price to consumers, and some states introduced privileges for hybrid vehicle drivers.

Separately, the automaker also plans to invest $413M in its Kentucky plant in Georgetown to manufacture new vehicle. The board of directors of the company will make a decision soon about where it will make the new model, which has not yet been announced, according to Jim Kersteiner, the assistant general manager in the accounting and finance group for Toyota Motor Engineering and Manufacturing North America Inc. Kersteiner added that the project would begin by late 2008.

Rick Hesterberg, the assistant manager of corporate communications for Toyota Motor Manufacturing Kentucky, said the company is not looking to expand the plant. The new investment would be used for the acquisition of new production equipment and for repairs of assembly and engine production areas in connection to the new model.

To encourage the Japanese automaker to make its investment at the Georgetown facility, the Kentucky Economic Development Finance Authority gave preliminary approval for Toyota to receive $25 million in tax incentives. The incentives were offered under the Kentucky Reinvestment Act, which offers tax breaks to companies with more than 1,000 employees that plan to invest $100 million or more in an existing facility. In 2006, the automaker also was granted $18 million in state tax incentives under the reinvestment act for investing $248 million at the Georgetown facility.