Toyota Yaris cars sold in the Canadian and U.S. markets will be assembled in France instead of Japan beginning in May, 2013, in another move by Toyota Motor Corp. to reduce the battering it is taking because of the high value of the yen.
Toyota's shift follows the move by Honda Motor Co. Ltd. to export its subcompact Fit model to Canada from a factory in China as Japanese auto makers adjust to the currency. Since 2008, the yen has soared about 20 per cent versus the Canadian and U.S. dollars.
Profit margins are razor-thin on subcompact cars and a 6.1-per-cent tariff on vehicles imported to Canada from outside North America makes it even tougher for car companies.
But auto makers regard the subcompact market as important because it's a key entry point for new buyers, who can be kept in the family if they're happy with the sales process and performance of the car.
The Canadian tariff will still apply on Yaris models shipped from France. But because 60 per cent of the cars are sold in Quebec, the change will reduce logistics costs because of the shorter distance across the Atlantic from France to East Coast ports and then to Quebec, compared with shipping from Japan to Vancouver and then transporting vehicles across the country.
"A lot of factors go into how we make these production decisions and one of them is currency," said Toyota Canada Inc. spokeswoman Sandy Di Felice. "There are some real advantages to taking this car from France."
Yaris sales rose 52 per cent in the first five months of 2012 from the same period a year earlier, but the car is tracking to sell considerably below its 2008 peak annual sales of 40,602.
The move by Toyota leaves Mazda Canada Inc. as the only major auto maker importing subcompact cars from Japan. But that will change once a new Mexican plant comes on stream in 2014.
Honda is also building a factory in Mexico and Fit models sold in North America will be delivered from there, also beginning in 2014.
Chrysler Canada Inc., Ford Motor Co. of Canada Ltd. and Nissan Canada Inc., import subcompact cars from Mexico.
General Motors Co. assembles its new Chevrolet Sonic subcompact at a plant in Michigan.
The best-selling subcompact car this year is the Hyundai Accent, which Hyundai Auto Canada Corp. imports from South Korea, where the currency has not soared the way the yen has.
Toyota said it will export about 25,000 Yaris models to North America from France. The plant will require an investment of €8-million ($10.3-million) to install gasoline engines and automatic transmissions and meet different bumper requirements.