10.26.2010

Toyota to produce Prius in Thailand

Marketplace Public Radio, October 22, 2010


Toyota has announced it'll start producing the Prius in Thailand next month. This is the first time the hybrid will be produced outside of Japan.

TEXT OF STORY

STEVE CHIOTAKIS: A day after the company announced a massive recall of a million and a half of its vehicles, Toyota has announced it'll start producing the Prius in Thailand next month. That's going to mark the first time the hybrid will be mass-produced outside of Japan. Marketplace's China Bureau Chief Rob Schmitz explains why.


ROB SCHMITZ: A move to sunny, tropical Thailand may seem like the perfect therapy for a company plagued by recalls. But Toyota is not going to Thailand for the beaches. Auto industry expert Bill Russo says a rise in currency is cutting into profits at home and Toyota needs to lower production costs because it's through selling with selling the Prius to a niche market.

BILL RUSSO: If you're going to be successful in mass marketing these types of vehicles, you need to seek economies of scale which comes from larger production footprints in low-cost markets like Thailand.

The move is part of a broader plan at Toyota to sell a million hybrid vehicles a year. So why not seek that economy of scale in a low-cost market like China? First, China forces foreign automakers to enter into joint ventures with Chinese companies. Secondly, hardly anyone in China wants to buy a Prius. Toyota shut down a small assembly plant in China last year due to terrible sales there.

In Shanghai, I'm Rob Schmitz for Marketplace.


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