Toyota to move Highlander hybrid output to Indiana

CHICAGO: Toyota will shift production of its Highlander hybrid sport-utility vehicle from Japan to Indiana, where the company will invest $400 million and add 400 new jobs.

The Japanese automaker also plans to export some Highlanders to other countries. Production of the hybrid SUV will likely begin in the second half of 2013.

The move is part of Toyota’s broader strategy to create an export hub in North America, partly to soften the impact of the stronger yen. Toyota exports about 100,000 vehicles made in the US each year, including its Camry sedan and Sienna minivan.

“There are so many North America-specific products that can fit in other markets as well,” Yoshi Inaba, president and chief operating officer in charge of Toyota’s North American operations, told reporters during the Chicago auto show.

Toyota now makes the Highlander and Sequoia SUVS and the Sienna minivan in Princeton, Indiana, where Toyota now employs nearly 4,000 workers. With the expansion, Toyota will be able to build an additional 50,000 hybrid and gas- powered Highlanders.

Moving all production of the Lexus RX crossover to Canada is also “on our radar,” Inaba said.

The soaring yen makes it cheaper to buy commodities and potentially buy overseas assets, but it also diminishes earnings from major auto markets such as the US. In November, President Akio Toyoda said the company may “deepen alliances with suppliers and dealers” to offset the yen.

Last year, Toyota built 2.76 million cars in Japan, accounting for one-third of Japan’s total vehicle production. It exported 57 percent of that, much of it at a loss.

Inaba touted the economic impact of the expansion and said each auto job would create three and a half “spin-off” jobs. Last year, Toyota opened a new plant in Mississippi to make Corolla cars that were built in Japan, creating 2,000 new jobs.

“Export usually stabilizes your production,” Inaba told reporters. “So that is good for the economy.”

Toyota is readying a burst of new models due in the United States this year that the automaker hopes will help it regain lost ground after a tough 2011 marred by production losses in the wake of the March earthquake in Japan.

Last week, Toyota executives noted that competition in North America has stiffened this year as the Detroit automakers improve their quality.