Toyota adjusts US production to face tariffs and focus on hybrids

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A Toyota is reformulating its production strategy in the United States. The Japanese giant plans to reduce model manufacturing Lexus on American soil, a strategic move to adapt to the Trump administration’s new tariff policies. The decision, revealed by Nikkei Asia, aims to optimize production and prioritize the manufacture of its hybrid vehicles, which are extremely popular.

Toyota adjusts US production to face tariffs and focus on hybrids

Toyota currently produces two Lexus models in the US: the ES sedan in Kentucky and the TX SUV in Indiana. According to the report, production of the Lexus ES in Kentucky will end.

The next generation ES, whether gasoline or electric, will be imported directly from Japan. With this change, the factory in Indiana will become the only one in the US to produce cars from the luxury brand. Toyota will, however, maintain production of other Lexus models, such as the RX and NX, at its factories in Canada.

Toyota reduces production and will prioritize hybrids – Photo: Disclosure

The decision to move production of the Lexus ES has one main reason: the need to increase production of hybrid vehicles. The Kentucky factory, one of the largest in the world, is crucial for manufacturing high-demand models such as the Toyota Camry hybrid and the RAV4 crossover.

Both have seen strong sales growth, and the relocation of Lexus ES production will allow Toyota to use factory capacity to meet this growing demand.

The strategy behind the change

This change of strategy is a direct response to the Trump administration’s trade policy, which imposed 15% tariffs on the import of Japanese cars, a considerable increase from the previous rate of 2.5%.

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By relocating production of Lexus models to Japan and focusing U.S. manufacturing on popular hybrids, Toyota seeks to mitigate the impact of tariffs and continue to profit even as some of its luxury cars are imported.

Do you think Toyota’s strategy of reallocating production to adapt to tariffs and focusing on hybrids makes sense? Share your opinion in the comments.

Read here: Toyota announces production of electric car and battery in Europe