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Coming to America: The European Toyota?!

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It is no secret that, as the multinational giant company that Toyota has become, its vast model lineup has seen some unexpected travels. It’s only natural that the Japanese carmaker would export many of its vehicles from its home base in Toyota City and environs, but the stubbornly strong yen has made this an increasingly money-losing proposition. Thus, we now see U.S.-built Toyotas exported to 19 countries around the world, including Camrys and Siennas to South Korea and Sequoias to several South American and Middle East markets; Canadian-built Corolla, Matrix and RAV4 units south to the United States; Australian-built Camry and Aurion (Camry V6) models to 13 markets in the Middle East, New Zealand and the Pacific Islands; British-built Avensis Tourer station wagons to Japan…the list goes on and on. Now, an official Toyota Europe press release informs us of a new and quite unexpected trade route for the company: from France to North America (United States, Canada and Puerto Rico) for the Toyota Yaris!

Beyond the expected happy-talk of what a privilege it is for Toyota Motor Manufacturing France (TMMF) to be building 25,000 cars a year for export to North America starting in May 2013, the news release also includes this more nuts-and-bolts informative passage:

Building the Yaris for customers across North America will represent an additional investment of EUR 8 million at TMMF. This investment is required to build the car to the specific requirements of the new market, including the installation of a North American specific 1.5-litre petrol engine, automatic transmission, differences in the rear bumper, as well as other items linked to specific local regulations. Only petrol versions of Yaris will be exported to North America.

Why?
Much has been written about Toyota’s conundrum-cum-dilemma about how the strong yen is hurting the company’s bottom line versus its commitment to building no less than 3,000,000 vehicles in Japan in order to support the motherland. In the greater scheme of things, we’d say that sophisticated hybrid technology and luxury Lexus models make the strongest case for remaining Japanese-built, while low-profit B-segment entry-level minicars like the Yaris are begging to be built outside Japan. And it seems that, with the Eurozone’s current roller-coaster financial downturn, the euro currency’s value is low enough that this move makes sense, France’s high labor costs notwithstanding.

Per Wikipedia, the Toyota Yaris is built not only in Japan and at the Valenciennes facility in France, but also in China, Indonesia, Taiwan and Thailand. While it would seem that any of those Asian locales would have lower labor costs than France, we suspect that equally lower in-car equipment, quality and materials levels probably made Toyota think twice before using those as Yaris sources. Perhaps Toyota also saw a moral imperative to somehow bolster its European operations amidst all the doom-and-gloom and plummeting sales so prevalent in the Old Continent nowadays.

As an additional trivia aside, this would make the Yaris the first French-built car to be sold in North America in over 20 years.

So much for Mexico…
With a sizable portion of North America’s A, B and C-segment cars (Chevrolet Spark, Fiat 500, Ford Fiesta, Honda Fit, Mazda2, Mazda3, Nissan Sentra, Nissan Versa and Volkswagen Jetta) either currently built in Mexico or confirmed for assembly there in the near future, this author made his case for doing the same with Toyota Yaris back in December 2010. So why did Toyota opt for France over Mexico, in a reversal of the Battle of Puebla that led to all those Cinco de Mayo celebrations so popular along the Hispanic U.S.? Our best guess is that a combination of France being the quickest way of outsourcing Yaris production from Japan; the fact that building all-new Mexican assembly lines for Yaris would surely cost more than the US$10.4 million earmarked for North America-market adaptations to French-built Yaris and, possibly, fears of Mexican drug cartel violence tipped the balance in favor of France.

Still, don’t count Mexico out longer-term. Its labor rates are still much lower than Europe’s, Japan’s or the rest of North America. Further, Mexico’s invitation to join the budding Trans-Pacific Partnership and the fact that Toyota already has a production presence there at the Tacoma-building Tecate, Tijuana plant in Baja California are certainly factors not to be discounted. Google also reminds us that rumors of a second Mexican Toyota facility have been around for years, as recently as a January 2012 report which also suggests that the carmaker is considering a long-overdue decision to bring the Lexus brand to Mexico.

Will the French Yaris change?
The announced May 2013 date for the start of Yaris exports from France might mean an early 2014 model year designation. Would that coincide with a scheduled mid-life minor facelift? Not likely, as those tend to happen after the third year of production, and the current 3rd-gen (XP130) Yaris debuted for the 2012 model year. Also unlikely is North America getting any of the more upmarket options available in the European Yaris (unless the upcoming almost-$20,000 Ford Fiesta Titanium turns out to be an unexpected hit). With Yaris sales totalling 40,076 in 2010 and 32,704 in 2011 in the United States alone, it’s obvious that the 25,000 French-built Yaris units earmarked for the United States, Canada and Puerto Rico are meant as supplementary units. In other words, we’ll most likely see a mix of Japanese-built and French-built Yaris, just as we see a mix of U.S., Canadian and Japanese-built units of such models as Corolla, RAV4 and Lexus RX 350.

One other dark-horse possibility is the fact that, between the death of the Yaris sedan (already relegated to fleet-only sales for 2012), the huge current popularity of the Yaris-derived Prius C and more profitable North American assembly of the next Corolla – possibly featuring new Camry-style value pricing, Toyota may expect Yaris sales in the future to drop below 2010-11 levels.

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