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Toyota (TM) Invests $1.1B to Boost RAV4 Production in Canada

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Per Bloomberg, Toyota Motor Corporation (TM - Free Report) announced an investment of $1.1 billion (C$1.4 billion) for the development of Canadian operations to manufacture usual and hybrid RAV4 sport utility vehicles (SUV). This development came amid the uncertainty over North American Free Trade Agreement (NAFTA) talks.

The investment will be made at Toyota’s two hubs, situated in Cambridge and Woodstock of Ontario. Further, C$110 million each from federal and provincial governments will be contributed for the development. The expansion is anticipated to create 450 job vacancies. Currently, the combined employee strength of the two facilities is about 8,000, which has manufactured approximately 6,000 vehicles in 2017.

With the country’s deteriorating auto industry, this investment by Toyota is expected to help Canada to become the major manufacturer of its hybrid vehicles in North America and thus support the growth of Canada’s auto sector.

Toyota Motor Corporation Price and Consensus

Earlier, the company shifted its Corolla compact production to the United States in order to expand its production of RAV4. Except Toyota, many other auto manufacturers are also moving their focus on SUVs over other vehicle types, due to rising customer preferences.

Price Performance

Year to date, Toyota’s stock has gained 3.2%, outperforming the 1% decline of the industry it belongs to.

 

Zacks Rank & Stocks to Consider

Toyota carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the auto space are Dana Incorporated (DAN - Free Report) , Volkswagen AG and Allison Transmission Holdings, Inc. (ALSN - Free Report) . Dana and Volkswagen carry a Zacks Rank #2 (Buy) while Allison Transmission sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dana has expected long-term growth rate of 10%. Over a year, shares of the company have gained 13.2%.

Volkswagen has expected long-term growth rate of 6.2%. Shares of the company have risen 24.9%, over the past year.

Allison Transmission has expected long-term growth rate of 10%. Over a month, shares of the company have gained 7.8%.

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