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Toyota (TM) to Expand in Malaysia with New Production Plant

Zacks Equity Research
Updated

Toyota Motor Corporation TM announced that it will open a new vehicle production plant in Malaysia. The automaker is undertaking this initiative to satisfy the rising demand in the Malaysian market. Toyota expects that this plant will serve as its production core in the country.

The new plant will be constructed in Klang, in the state of Selangor. Its annual production capacity is estimated to be 50,000 vehicles. Toyota will invest around 49 billion yen ($488 million) for this plant. This facility will exclusively produce passenger vehicles, including energy-efficient ones. It is expected to start operations from early 2019 and will help double Toyota’s production volume to 100,000 units per annum in Malaysia.

After the new plant starts operations, UMW Toyota Motor Sdn. Bhd. (“UMWT”), which is Toyota’s local partner, will stop producing passenger vehicles and focus exclusively on the production of commercial vehicles. Thus, Toyota’s existing plants will mainly focus on commercial vehicles. The automaker expects that the division of production will lead to optimal utilization of processes and distribution, which will enhance the productivity of the existing plant.

Toyota intends to build a competitive plant with innovative production technologies, including freely extensible lines and compact painting booths. These technologies will also be added to Toyota's new Chinese line.

Toyota focuses on the creation of competitive plants. Last year, it opened a new plant in Mexico and a new line in China. It also added two new engine plants this year in Indonesia and Brazil.

Currently, Toyota carries a Zacks Rank #5 (Strong Sell).

Some better-ranked automobile stocks include Autoliv, Inc. ALV, Oshkosh Corporation OSK and Superior Industries International, Inc. SUP. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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TOYOTA MOTOR CP (TM): Free Stock Analysis Report
 
AUTOLIV INC (ALV): Free Stock Analysis Report
 
SUPERIOR INDS (SUP): Free Stock Analysis Report
 
OSHKOSH CORP (OSK): Free Stock Analysis Report
 
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