Toyota Motors Corp. (TM) will invest $50 million in a partnership with California-based electric vehicles maker Tesla Motors Inc. that will reopen the New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, California. The NUMMI plant was closed down by Toyota on April 1.
NUMMI, opened by General Motors (MTLQQ) in 1962, was shut down in 1982 due to operational inefficiency. However, the plant was reopened two years later under a 50/50 joint venture between General Motors (GM) and Toyota.
NUMMI was a remarkable joint venture in Toyota’s -- as well as America’s -- history. The joint venture taught Americans all about the famous Japanese ‘lean manufacturing system’ (focused on just-in-time delivery) and Toyota stepped into the U.S. market using GM’s supply lines.
NUMMI produced Corolla and Tacoma for Toyota and Pontiac Vibe (Toyota’s version of the Vibe) for GM. However, GM had decided to pull out of NUMMI after completing its bankruptcy filing in June last year, as it has discontinued the Pontiac brand.
Toyota stopped production at NUMMI in March this year and shifted production to its other plants in the U.S., Canada and Japan. Production of the Corolla subcompact has been moved to Cambridge, Ontario, as well as Japan, and Tacoma pickups are produced in San Antonio, Texas.
Toyota’s partnership with Tesla is aimed at developing and building electric cars, primarily the Model S electric sedan, developed by Tesla. Tesla plans to begin delivering Model S vehicles to customers from 2012. It is slated to sell for $49,900, including federal tax credits, and is designed to travel 300 miles on a 3–5 hour charge.
Tesla has begun hiring back the former NUMMI employees to the plant. The automaker plans to add 50 workers per month.
The reopening of the NUMMI plant is definitely good news for the Californians. Due to the closure, as many as 5,400 direct jobs have been lost, including 4,550 hourly UAW workers.
On the other hand, the reopening may end up clearing the tarnished reputation of the Toyota to some extent due to its recent string of recalls.
So far, Toyota has recalled more than 8.5 million vehicles from around the world related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems. The recall included popular models such as the 2010 Prius hybrid and Toyota Camry.
U.S. government has imposed the highest-ever fine of $16.4 million on Toyota, accusing it of a deliberate delay in recalling the vehicles by hiding its defects even though manufacturers are legally obligated to notify the U.S. safety regulators within 5 business days if they come to know of a safety defect.
To regain consumer confidence, Toyota began offering largest sales incentives in its history since March until May this year. The incentives included zero-percent financing for five years on top-selling models such as the Camry, attractive leasing terms and free maintenance for two years for Toyota loyals.
Read the full analyst report on "TM"
Read the full analyst report on "MTLQQ"
Zacks Investment Research
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NUMMI was a remarkable joint venture in Toyota’s -- as well as America’s -- history. The joint venture taught Americans all about the famous Japanese ‘lean manufacturing system’ (focused on just-in-time delivery) and Toyota stepped into the U.S. market using GM’s supply lines.
NUMMI produced Corolla and Tacoma for Toyota and Pontiac Vibe (Toyota’s version of the Vibe) for GM. However, GM had decided to pull out of NUMMI after completing its bankruptcy filing in June last year, as it has discontinued the Pontiac brand.
Toyota stopped production at NUMMI in March this year and shifted production to its other plants in the U.S., Canada and Japan. Production of the Corolla subcompact has been moved to Cambridge, Ontario, as well as Japan, and Tacoma pickups are produced in San Antonio, Texas.
Toyota’s partnership with Tesla is aimed at developing and building electric cars, primarily the Model S electric sedan, developed by Tesla. Tesla plans to begin delivering Model S vehicles to customers from 2012. It is slated to sell for $49,900, including federal tax credits, and is designed to travel 300 miles on a 3–5 hour charge.
Tesla has begun hiring back the former NUMMI employees to the plant. The automaker plans to add 50 workers per month.
The reopening of the NUMMI plant is definitely good news for the Californians. Due to the closure, as many as 5,400 direct jobs have been lost, including 4,550 hourly UAW workers.
On the other hand, the reopening may end up clearing the tarnished reputation of the Toyota to some extent due to its recent string of recalls.
So far, Toyota has recalled more than 8.5 million vehicles from around the world related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems. The recall included popular models such as the 2010 Prius hybrid and Toyota Camry.
U.S. government has imposed the highest-ever fine of $16.4 million on Toyota, accusing it of a deliberate delay in recalling the vehicles by hiding its defects even though manufacturers are legally obligated to notify the U.S. safety regulators within 5 business days if they come to know of a safety defect.
To regain consumer confidence, Toyota began offering largest sales incentives in its history since March until May this year. The incentives included zero-percent financing for five years on top-selling models such as the Camry, attractive leasing terms and free maintenance for two years for Toyota loyals.
Read the full analyst report on "TM"
Read the full analyst report on "MTLQQ"
Zacks Investment Research
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