Written by gary on June 28th, 2010

Toyota’s decision to build the Corolla in Mississippi is a smart move, especially as competition looks to heat up in the smaller-vehicle market, analysts say.corolla-5million_500x375

Toyota announced last week it will build the Corolla, the compact segment’s top-selling vehicle, starting next fall at its plant under construction in Blue Springs, Ms.

With automotive sales showing signs of recovery, Toyota is wise to focus its newest U.S. production facility on a staple of its lineup. “Given Corolla’s importance in the Toyota world, it’s important for them to increase capacity,” analysts say.

The Corolla follows only the Camry in U.S. sales for the world’s largest automaker and is the number 1 selling car in the world.

Corolla production was shipped to Japan when the company shuttered a California plant last year.

Toyota officials said Thursday that the Blue Springs plant gives them the best opportunity to quickly restart production domestically. Toyota will be ramping up Corolla production at a time when other automakers are taking bolder steps into the smaller-vehicle market.

In addition to regular competitors such as the Honda Civic, a new version of the Hyundai Elantra is coming this year, while the Ford Fiesta and Focus and the Chevrolet Cruze also will be major players among smaller cars. Toyota is challenged in that they’re introducing an older vehicle (among) a lot of flashy new vehicles. They are also in a vulnerable position because you have the domestics, Ford and General Motors that are feeling strong right now with Hyundai, Kia and VW in Chattanooga trying to nip at their heels.

Toyota keeps redesign schedules close to the vest, but it is estimated that a totally new Corolla to be released in 2013. There are reports that say the Corolla produced next fall in Blue Springs will likely have a new front and other design updates.

From January to May, 110,132 Corollas were sold in the United States, besting the competition. Honda was a close second with 109,643 Civics sold in the same period. Honda will launch a new generation Civic next year.

Corolla is the third vehicle planned for Blue Springs. Originally, the plant was to build the Highlander SUV then the Prius hybrid. But the small-vehicle sector has greater growth potential than the hybrid sector, in large part because of increased competition. Between now and 2014, those sales should grow by about 5 million units. The hybrid market’s fortunes are linked to the cost of gas.

When fuel prices climbed above $4 two summers ago, hybrid vehicles got long looks from car buyers and Toyota Dealers werre stacked up with sales orders. With prices below $2.50 in Mississippi and elsewhere, though, emotions have cooled and they’ve lost some luster.

Toyota officials said Thursday that Prius production will remain centered in Japan.

The automaker also will have to successfully market its 44-year-old Corolla brand to a younger breed of car buyer who isn’t as loyal to a particular make and model as boomer-age buyers. The Corolla, does sell well among younger buyers. But could it be seen as representing “their parents’ brand” as those buyers look for the most quality and up-to-date features at the lowest price?

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