Toyota is constructing a new engine plant in São Paulo, Brazil, this month. According to Automotive Business, a Brazilian automotive publication, Toyota executive Steve St Angelo said, at the groundbreaking ceremony, that the company is looking to attract 19 suppliers to the area and would like 65% of its components built in Brazil. The plant is expected to employ 700 people and build the block, cylinder head, and crankshaft as well as assemble the engine. Eventually, the facility is expected to build 1.3-litre and 1.5-litre engines for the Toyota Etios and 1.8-litre and 2.0-litre engines for the Corolla; both models are built in Brazil, with the new engine plant located between them. St Angelo also said that Toyota has the ability to adjust plant production capacity to reduce dependence on importing products to Brazil. Initial production at the new plant, due online in 2015, is expected at 70,000 units, ramping up to 200,000 engines per year. The unit is Toyota's first engine plant in South America but fourth automotive plant in the country.
Significance: IHS Automotive forecasts that Toyota's Brazilian vehicle assembly production will increase to 207,000 units by 2018, up from the forecast of 61,000 units in 2014. Toyota appointed Steve St Angelo to lead operations in Latin America and South America in early 2013; he had led the company's Georgetown, Kentucky (United States) plants and served as a chief quality officer. The company currently builds the Corolla in Brazil but is expected to add productions of Etios, Vios, and a B-SUV in 2015 and 2016. These investments had already been announced, including the engine plant. Toyota seems clearly swayed by the Brazilian tax situation but has traditionally operated under the strategy of frequently building where you sell. The company opened its first plant in Brazil in 1958.
