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Last Updated: Friday, 12 January 2007, 00:04 GMT
Toyota, an All American car company?
By Steve Schifferes
Economics reporter, BBC News, Detroit Motor Show

Toyota Tundra
Toyota's Tundra: designed, built and marketed in the USA

Having made tremendous headway in the US market with its small, energy efficient petrol-electric hybrid cars, Toyota is getting ready to take on its US rivals on their home turf with an American model of its own.

Toyota's Tundra pick-up truck is the Japanese company's first all-American vehicle, completely designed and manufactured in the good 'ol US of A.

"The Asian automakers have cornered the market on vanilla," says Global Insight automotive analyst Rebecca Lindland.

"Now they're adding the hot fudge chocolate with cherries on top, which is what they have to do to progress in the US market."

Toyota has built a spanking new assembly plant for the Tundra in San Antonio, Texas, which is supported by a slew of design and development centres across the country.

It hopes its US branding will attract truck buyers in the American heartland in the West and South and help it achieve sales of 200,000 Tundras this year alone.

"Toyota is going after a new segment with its truck - heartland America, NASCAR drivers, who are more patriotic [and] not Toyota drivers typically," says Ms Lindland.

"It is good to base production in Texas - heartland of this group."

Climbing the ladder

Toyota knows that for it to reach these NASCAR-watching men, being patriotic has to be part of the pitch.

Our goal is produce all the cars we sell in the US within US
Toyota sales executive Jim Lentz

If it succeeds here, the company that would be hurt most would be Ford, the market leader in pick-up trucks.

Pick-up trucks are big business in America, where trucks (including minivans - or people carriers - and sports utility vehicles - or SUVs) outsell cars by some margin.

And although demand for big SUVs is falling, demand for smaller so-called crossover models - or CUVs - is growing sharply.

Success could also elevate Toyota from third position in the US, to second after General Motors, knocking Ford into third place in terms of the number of cars and trucks sold.

Boosting capacity

Toyota is deadly serious about building up its US manufacturing capacity to match its rising sales.

Robert Lutz, vice chairman, General Motors view the Toyota Tundra
The Tundra was designed to spook the locals

The company already produces more than 1.5 million cars in the USA, but it sells 2.4 million.

The number of locally produced Toyota models is set to soar as the car maker is planning to open another two new plants next year, and probably at least another two by 2011.

In total, this should add at least 500,000 to its production capacity.

"We are a global company, but we have to apply our global lessons locally and to localise production," Toyota's US president Jim Press tells BBC News.

"Our goal is produce all the cars we sell in the US within US."

Toyota's strategy of designing globally but manufacturing locally is characteristic of the new global division of labour in the car industry.

GM has also merged its design teams around the world, creating common platforms for different sizes of cars, while modifying the designs to local conditions.

Toyota, however, also has a broader political purpose in mind.

No unions

In the 1980s, after pressure from the Big Three automakers and their unions, Toyota's exports from Japan to the US were limited by a so-called Voluntary Export Restraint agreement.

That was when Toyota decided to build up as much manufacturing capacity in the US as possible, opening its first plant in Kentucky in 1988.

Toyota is keen to stress that it is still adding jobs, while GM, Ford and Chrysler are axing the jobs of thousands of unionised workers.

Workers in Toyota's US plants have never voted for a union, and some observers believe that union work rules would impede its vaunted just-in-time production system.

But with the Democrats now back into control of Congress, and the 2008 Presidential race up for grabs, there have been renewed calls by the unions to give preferential treatment to American-owned carmakers like Ford and GM.

One proposal is for a special tax-break for petrol-electric hybrids built in the USA, aimed at attracting Toyota's Prius model, which is still only made in Japan.

Toyota is already converting the rest of its range to offer a hybrid option, and expects to sell more Camry hybrids than Prius hybrids in the future.

In the past 30 years there has been a dramatic change in the US car industry, which at that time had 90% of its cars built by US companies in the USA.

Now foreign owned companies - mainly Japanese and Korean, though there are also a fair few Europeans doing well here - sell and build nearly half of all cars sold in America.

This has caused a certain amount of unease among Americans, and not just in Detroit.

Yet, the trend is likely to continue as the likes of Honda and Nissan, Hyundai and Kia, follow suit and start branding their cars as Made in the USA.

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