Toyota Motor Corporation (NYSE:TM) shares are trading lower on Wednesday after Reuters reported that the carmaker was adjusting its U.S. manufacturing footprint.
According to Benzinga Pro, the company’s stock has gained over 13% in the past year. Investors can gain exposure to the stock via Precidian ETFs Trust Toyota Motor Corporation ADRhedged (NYSE:TMH).
Toyota intends to manufacture electric SUVs modeled on the RAV4 and Land Cruiser in Kentucky, but halt production of Lexus sedans.
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Nikkei reported yesterday that the changes come as part of a broader realignment that includes consolidating Lexus operations in the U.S.
The automaker’s Kentucky plant already produces hybrid Camry sedans and RAV4s, which remain strong sellers in the American market, Nikkei adds.
By removing the Lexus ES from its production line, Toyota aims to expand hybrid output and reinforce its commitment to electrification.
The company will stop building the Lexus ES in Kentucky once current orders are completed, with the next generation of the model exported from Japan.
The Indiana facility will become Toyota's sole U.S. site for Lexus vehicles, producing the larger Lexus TX SUV. Lexus models will also continue to be manufactured at the company's Canadian operations.
Toyota Wrestles With Tariffs
Toyota's restructuring follows tariffs of 25% on imported cars announced by the Trump administration in April.
A recent executive order reduced that rate to 15% for Japanese imports, still far higher than the 2.5% duties in place before. The higher costs have prompted Toyota and other Japanese automakers to reassess supply chains and production strategies.
Nissan has shifted output of certain SUVs to the U.S., while Mazda and Subaru have raised prices on key models.
Toyota acknowledged that producing more cars in the U.S. will likely increase expenses due to labor and material costs.
However, the company expects luxury Lexus models to remain profitable even when exported from Japan, thanks to their higher pricing, Nikkei adds.
The adjustments underscore the challenges global automakers face as they navigate new trade realities while pursuing electrification and hybrid growth.
Price Action: TM shares are trading lower by 1.43% to $198.03 at last check on Wednesday.
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