Toyota Said to Plan to Move U.S. Sales Office to Texas – Bloomberg

Posted: Monday, April 28, 2014

Toyota Motor Corp. (7203) is moving
substantial parts of its U.S. headquarters in Torrance,
California, to suburban Dallas as the world’s largest automaker
seeks savings from its U.S. sales unit, people familiar with the
matter said.

Employees will be informed of the plan today, said the
people, who asked not to be identified disclosing private
conversations. Steve Curtis, a Toyota spokesman, didn’t return a
call on the matter.

The surprise move is a blow to the Golden State, the
biggest U.S. auto market and proponent of the strictest clean-air rules. Toyota’s Prius hybrid has been California’s top-selling model for the past two years and helped secure a leading
22 percent market share. It also represents a victory for Texas
Governor Rick Perry, who’s made repeated visits to California to
lure businesses to his state with promises of lower taxes and
easier regulations.

“It would be very consequential for Southern California,”
said Jack Nerad, executive market analyst for vehicle-price data
service Kelley Blue Book in Irvine, California. “There might be
some brain drain and tumult for employees, though it should be
largely seamless to the consumer. This kind of thing can create
some disruption of momentum.”




Photographer: Tomohiro Ohsumi/Bloomberg

Toyota Motor Corp., the Toyota City, Japan-based automaker, has more than 5,300 employees in California, most of whom work at its Torrance campus. Close

Toyota Motor Corp., the Toyota City, Japan-based automaker, has more than 5,300… Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

Toyota Motor Corp., the Toyota City, Japan-based automaker, has more than 5,300 employees in California, most of whom work at its Torrance campus.

Toyota fell 0.4 percent to 5,473 yen in Tokyo trading. The
Toyota City, Japan-based company’s shares have dropped 15
percent this year. The automaker’s American depositary receipts
rose 0.2 percent to $106.72 at 11:27 a.m. in New York.

Destination Texas

Toyota has more than 5,300 California employees, most at
its Torrance campus in sales, finance, marketing, engineering
and product planning. Details on which functions will move and
when may be announced as soon as today, after the employee
meeting. When Nissan Motor Co. (7201) moved its North American
headquarters to lower-cost Tennessee in 2006, only 42 percent of
employees initially chose to relocate.

Toyota’s former joint-venture plant in Fremont, operated
for 25 years with the predecessor of General Motors Co. (GM), closed
in 2010 and was sold to electric-car maker Tesla Motors Inc.
Toyota also operates a small parts factory in Long Beach and has
a large design studio, Calty, in Newport Beach.

The company’s new regional sales headquarters may be in or
near Plano, Texas, said three of the people who asked not to be
named as the plan isn’t yet public. The majority of Toyota’s
Torrance operations may move to Texas over a two-year period,
the people said.

Lucy Nashed and Felix Browne, spokesmen for Perry, didn’t
respond to e-mails on the matter.

Perry’s Commercials

Perry, in his final year as governor, began airing radio
commercials in California during his March swing through the
state that highlighted its high taxes.

“A year ago, I was here, in California, encouraging
companies to look to Texas for expansion and relocation,” he
said in the ad, paid for by a group called Americans for
Economic Freedom. “Over the past year and a half, more than 50
California companies have announced plans to expand or relocate
in Texas, creating more than 14,000 jobs.”

In February, Occidental Petroleum Corp. (OXY) said it was
splitting its operations, keeping a portion in California and
setting up a new unit in Houston. Raytheon Co. (RTN), a technology
company that specializes in defense, last year moved its space
and airborne systems unit to McKinney, Texas, from southern
California.

Toyota Marketing

While Texas is home to Toyota’s pickup truck plant in San
Antonio and a General Motors Co. factory in Arlington, the state
traditionally hasn’t been a center of auto industry activity.

Separately, Toyota said it’s restructuring the Torrance-based U.S. marketing organization as part of an efficiency push
without detailing how many jobs may be eliminated. Some
employees are being reassigned to other parts of the company and
there is a “voluntary exit program” for people who choose to
leave, Toyota said yesterday in a statement. The revamped
marketing unit will begin operating from May 1.

Toyota’s decision to scale back in California, where it
established operations in 1957, comes as the company expects to
report a record 1.87 trillion ($18.3 billion) of net income when
it releases fiscal year results next month. Along with rising
sales in North America and other international markets, Toyota’s
earnings this year are benefiting from a decline in the value of
the yen, which surged in 2011.

Earnings Outlook

Since the company made that forecast, it agreed to a $1.2
billion fine to settle a U.S. Justice Department investigation
into how it delayed recalling popular models after complaints of
unintended acceleration.

U.S. sales for Toyota last year totaled 2.24 million cars
and light trucks, off a record 2.62 million in 2007. Combined
sales for the carmaker’s three brands fell 1.6 percent to
520,997 in the year’s first three months.

Toyota Motor Sales USA and Toyota Financial Services, based
in Torrance, in suburban Los Angeles, have more than 9,400 U.S.
employees. Torrance is home to Toyota’s Lexus and Scion lines,
as well as its namesake brand.

Additional Toyota units in Torrance include parts and
logistics operations to support dealers. The company’s Toyota
University training center is nearby.

Auto Center

Southern California rivals Michigan as a U.S. automotive
center. While it lacks large-scale vehicle manufacturing, the
region has U.S. sales and marketing headquarters for Honda Motor
Co. (7267)
, Hyundai Motor Co., Kia Motors Corp., Mazda Motor Corp. and
Mitsubishi Motors Corp., along with Toyota. It is also the
nation’s top automotive design center with 14 major studios, the
largest concentration in the U.S.

Toyota Financial Services, the biggest auto finance company
in the U.S., and Honda’s American Honda Finance Co. also in
Torrance, makes the region a hub of lending and loans for
dealers and car buyers.

To contact the reporter on this story:
Alan Ohnsman in Los Angeles at
aohnsman@bloomberg.net

To contact the editors responsible for this story:
Jamie Butters at
jbutters@bloomberg.net
Niamh Ring

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