Toyota has said it may stop production of Camry vehicles that are built in Japan for export to South Korea and move it to the US in an effort to cut down on high export costs. A spokesman for the company said it was not ready to discuss the move, which was first reported in The Nikkei business daily this week, but as Toyota prepares for US production of the next-generation Camry at its plant in Georgetown, Kentucky, as well as the Subaru plant in Lafayette, Indiana – a move in itself designed to offset exchange rate losses and boost production at the plants – capacity would be available to meet the needs of the South Korean market.
Currently, Camrys are built at the carmakers plant in Aichi prefecture Japan. However, the sustained strength of the yen means it would work out less costly for Toyota to ship vehicles produced at its US facilities.
The decision partly rests on the ratification of the pending Korea-US (KORUS) free trade agreement which would eliminate tariffs between the two countries. South Korea said it would halve tariffs placed on US-made vehicles immediately after ratification while the US maintained its tariff on Korean-made vehicles at 2.5% for the same period. Tariffs would then be removed under the new proposal drawn up at the end of last year.
Last year Toyota sold more than 313,000 Camry’s in North America making it the best-selling passenger car despite a drop of 6% on 2009 figures. It is targeting annual sales of 360,000 there next year. In South Korea, meanwhile, it sold just 5,000 in 2010.
Overall US vehicle exports to South Korea last year stood at around 16,660 according to figures from the US Department of Commerce.
Toyota’s overall exports from the US this year are expected to be around 24,000 according to the company.
The company’s decision to export from the US could also be influenced by Toyota’s recent announcement that it is investing $240m in its vehicle processing activity at the port of Long Beach as part of a renewed 20-year lease (read more here