That Lexus will come out with a new ES Hybrid, dubbed the ES300h, is no secret. Being an entry level Lexus, it has to watch its price point. It also has to contend with the high yen, most of the Lexi are exported. The Nikkei [sub] thinks it know how Toyota will solve this dilemma, at least partially. Toyota will make the ES300h on the Japanese island of Kyushu, “taking advantage of the site’s proximity to Asian suppliers of low-cost parts,” The Nikkei says.
“Asian suppliers of low cost parts” usually is code for China. Indeed, Toyota could be saying: “If we don’t go all the way to China, we might as well go halfway.” Kyushu sits midway between Tokyo and Shanghai. Other companies, such as Nissan, already make use of the strategic location.
Not only is Kyushu just short container hop across the sea to parts suppliers, it also is what the Nikkei calls “a convenient base for exporting to the growing Asian automobile market.”
This makes no sense to me. Toyota saves a few pennies in shipping costs, while producing in China would not only save even more in shipping expenses but a whole lot more in assembly labor.
Is Lexus really trying to expand its sales in China? If that was the case, then it would be better for them to set up over there: although, since the Chinese government doesn’t want any more makers to set up there, I don’t know if its possible for them to do so anyways.
What it will be able to do is obtain cheap parts and still claim it’s produced in Japan. That will appeal to the luxury buyers out there who might think twice about a Chinese produced luxury product.
Assembling in China is the easy part, but the politics is not. Remember Toyota has two “girlfriends” in China – FAW and GAC – both powerful state-owned groups, with the former being much more politically connected with Beijing. Toyota is trying to keep a delicate balance between these two, since both wants a piece of the Lexus pie, and Toyota doesn’t want to make either grumpy.
In contrast, Nissan has a much simpler relationship since she is only dating Dongfeng ;)
There is also the backlash of moving production to neighbors that your population isn’t exactly 100% friendly. You’ll hear “mexico” mentioned every time someone brings up the Fiesta and Fusion since both are Mexican assembled, for example.
If Ford doesn’t feel it can set up in the Southern States and remain non-UAW, then I’d rather the vehicles were produced in Mexico instead of some other low-cost country.
The sooner Mexican skills, productivity, and living standards can be raised, the sooner they will be able to feel they don’t need to leave their home in search of an acceptable, better life.
Don’t they already build the ES or did in the past at Kyushu? They plan to build ESs at Guangzhou in 2016. that’s more newsworthy. This seems like just some shifting of production plants within Japan. If you think this is a newsworthy step to overcome 8X JPY/USD, I don’t get why. Looks more like the reposting of non-meaningful info without sniff tests similar to what you guys take shots at other sites for doing.