Toyota scraps plans to make Corolla in Alabama
2020 Toyota Corolla
Toyota

Toyota scraps plans to make Corolla in Alabama

Joint Toyota-Mazda plant will build future SUV as small car sales continue to crumble.

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Cleveland, Ohio – Consumer abhorrence of small cars has spread to Toyota with the automaker scrapping plans to increase Corolla production in a plant under construction in Alabama.

Instead, the company will add a future sport utility vehicle (SUV) to the joint Mazda Toyota Manufacturing U.S.A. (MTMUS) plant under construction in Huntsville, Alabama. Mazda plans to make a small crossover at the plant set to begin production in 2021.

Toyota officials say the decision is “in response to changing market demands and a growing consumer appetite for light trucks and SUVs.”

That changing market demand has been the cratering of demand for compact cars – once a mainstay of global automotive production. Ford and General Motors stopped making the Focus and Chevrolet Cruze in recent months, yet even the removal of two high-volume models hasn’t made selling small cars easy for the remaining players.

For the first half of this year, U.S. total vehicle sales are down about 2.4%, but compact car numbers are down 19%. The bulk of that comes from the Focus (down 83%) and the Cruze (down 49%), but the remaining players all posted losses. Hyundai’s Elantra dipped 15%, Kia’s Forte was down 11%, and the Corolla and Nissan Sentra were each down 5%.

Small car sales, Q1 2019 vs. Q1 2018
 

So, even taking out the planned cancellations of the Cruze and Focus, compact sales fell 7%, nearly triple the rate of the broader market. The best performer was Honda’s Civic which fell only 4%.

Toyota already makes the Corolla near Tupelo in Blue Springs, Mississippi, and the Alabama joint venture with Mazda was intended to boost capacity for the car, eliminating the need to import small numbers of vehicles from Japan. Company officials say they’ll continue making the car in Mississippi but have no reason to expand capacity.

The MTMUS plant is on track for 2021 production with expectations of 300,000 units of annual production, 4,000 jobs, an $1.6 billion in facilities investment.

The rapid shift away from smaller cars has forced several automakers to reconsider strategies. Ford, GM, and Fiat Chrysler Automobiles (FCA) have slashed car models and closed plants, focusing attention on the crossover, pickups, and SUVs that are selling well.

At the Chicago and Detroit auto shows earlier in 2019, virtually all of the major product announcements were for larger vehicles.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 19 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net