Toyota (TM) plans to invest $383 million in four of its U.S. manufacturing facilities, aiming to increase hybrid vehicle production. The Japanese automaker is the biggest seller of hybrid cars in the U.S.
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The lion’s share of the investment, $222 million, will go to the company’s Alabama plant, which builds engines for both combustion and hybrid vehicles. Toyota plans to add a new production line at the facility. TM plans to invest $109 million in its Missouri factory, which will expand its capacity to produce more engine heads. Finally, Toyota plans to invest $36 million in its Kentucky powertrain plant and $16 million in its Tennessee engine block facility.
About half of the vehicles Toyota sells in the U.S. are produced locally. The company says that the latest investment in U.S. plants demonstrates its commitment to build where it sells.
Norm Bafunno, Toyota’s Senior Vice President for Unit Manufacturing and Engineering, said, “Toyota customers want vehicles that are fuel-efficient and electrified…These investments allow us to meet customer needs and quickly respond to an evolving market.”
Hybrid Vehicles Are in Demand
Toyota’s plan to boost its U.S. hybrid car production comes amid strong demand for the vehicles. U.S. hybrid vehicle sales increased 76% to a record 801,550 units in 2021, according to Wards Intelligence data cited by Reuters. Many drivers are drawn by the fuel efficiency of hybrids. Additionally, hybrids are more affordable than purely electric vehicles.
Wall Street’s Take
The Street is cautiously optimistic about Toyota stock with a Moderate Buy consensus rating. That’s based on one Buy. The average Toyota price forecast of $210 implies 22.5% upside potential to current levels. Shares have declined 8% year-to-date.
Stock Investors
TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Toyota, with 7% of portfolios tracked by TipRanks increasing their exposure to TM stock over the past 30 days.
Takeaway for Investors
Expanding production capacity at the U.S. plants could result in more economies of scale for Toyota. As a result, the company may be able to price its hybrid vehicles more competitively to increase sales and capture a larger market share.
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