Toyota Motor Corporation’s (TM - Free Report) Brazilian sales and manufacturing subsidiary — Toyota do Brasil Ltda. (“TDB’’) — intends to invest R$ 1 billion ($243.29 million) in its Sorocaba facility in Sao Paulo, Brazil. Notably, the Sorocaba plant will manufacture new models for Brazilian market, set for commercialization in 2021. The plant, which opened in 2012, currently manufactures the Etios and Yaris models. However, the company did not provide any details on the new car models. Per Reuters, Volkswagen (VWAGY - Free Report) and General Motors (GM - Free Report) will also join in making new investments in this region.
The facility has already provided expansion and logistics ease to suppliers since its initial project. Also, Toyota plans to add 300 new employees in order to commence production of the fresh models.
Toyota has two other plants in Brazil and the latest investment reflects the company’s team work with suppliers, dealers, employees, unions and the government, while also reinforcing its long-term vision in the country. Despite a turbulent automotive industry, Toyota continues to maintain sustainability, business competitiveness as well as focuses on developing its business operations.
The latest investment announcement comes a day after the company stated that it will invest $391 million in its truck assembly facility in San Antonio, TX. The move is part of Toyota’s $13-billion investment commitment in its U.S. operations, over five years through 2021. This will also help the company capitalize on high customer demand.
While Toyota’s focus on electric and self-driving vehicles bodes well; amplified labor costs, elevated raw-material costs and declining sales, particularly in North America, remain concerns.
Toyota’s shares have gained 9.5% over the past year, outperforming the industry’s decline of 13.6%.
Zacks Rank & Key Picks
Toyota currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the Auto-Tires-Trucks sector is Lithia Motors, Inc. (LAD - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lithia Motors has an expected earnings growth rate of 12.8% for 2019. The company’s shares have surged 48.5% in the past year.
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