World Economy

Toyota Stocks Slide After Trump Threat Over Mexico

Trump’s tweets have shaken Toyota into action
Toyota's shares fell 1.7% Friday in Tokyo.Toyota's shares fell 1.7% Friday in Tokyo.
Toyota’s shares fell 1.7% Friday in Tokyo

Toyota Motor Corp. is a "good corporate citizen" and intends to work with president-elect Donald Trump to help make America strong, the Japanese automaker's president, Akio Toyoda, says.

The CEO's remarks follow what Trump said on Twitter that Toyota would face a "big border tax" if it goes ahead with  plans for a new plant in Mexico. A statement issued by Toyota in the US did not directly address Trump's tweet, but stressed that the company has been in the US for six decades and that the Mexico plant will not affect jobs or production in the US, according to a report by AP.

Speaking before Trump put out his tweet, Toyoda responded to a question by a reporter at a New Year's gathering of Japan's auto industry by saying that he saw Trump's administration as an "opportunity."

"I don't know yet exactly how, but, regardless of who becomes president, our business is about being good corporate citizens. And by becoming good corporate citizens, we are facing the same goal of making America strong. And so we will continue to do our best," he said.

Toyota's shares fell 1.7% Friday in Tokyo.

Concealed Threat?

Regardless of pressures from Trump on automakers to shift more manufacturing into the US, the outlook for Japanese car makers has brightened lately as the yen has weakened and Tokyo share prices have risen following the US election.

Overnight, Trump's tweet criticized Toyota's plans to build the popular Corolla subcompact at a planned Mexico plant, tweeting: "NO WAY! Build plant in U.S. or pay big border tax."

Honda Motor Co. President Takahiro Hachigo, who was also at the reception in Tokyo, told reporters there were no planned production changes in Mexico.

Nissan Motor Co., Mazda Motor Corp. and Suzuki Motor Corp. had no immediate comment.

Japanese government spokesman Yoshihide Suga declined to comment on the tweet, noting that Trump had not yet taken office.

"I believe Toyota is a good corporate citizen for the US," Suga told reporters, adding that he hoped Trump, as an international businessman, understands trade and other matters.

When asked if he planned to meet with Trump like Softbank Corp.'s chief Masayoshi Son, to try to gain the president-elect's understanding, Toyoda pointed to the crowd at the reception.

"I am not in such a position," said Toyoda. "The auto industry is widespread, being supported by many people, including suppliers, materials-makers and after-service businesses. It is important we all be together in whatever we do."

Trump's tweet on Toyota echoed others targeted at Ford Motor Co. and General Motors Co. Nearly all automakers build small cars in Mexico to take advantage of its lower wages.

Toyota said it has invested over $21.9 billion in its US operations, including 10 manufacturing facilities, 1,500 dealerships and 136,000 employees. It said it has created jobs as it expanded in America and produced 25 million vehicles there over the last 30 years.

"Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry," the company said in a statement.

On Tuesday, Ford announced it had scrapped plans to build a new $1.6 billion small-car factory in San Luis Potosi, Mexico.

Toyota's knee-jerk move will worry several other automakers looking to cut costs from its overall production budget, following the tweets by Trump.

It also will add added risk to the companies who are looking to expand their range of cars in the growing South and Central American markets, which, compared with the US hold better longer term potential.

Add new comment

Read our comment policy before posting your viewpoints