March 17, 2017 / 12:47 AM / in 7 months

Toyota aims to boost Brazil exports with locally made engines

SAO PAULO, March 16 (Reuters) - Toyota Motor Co will soon begin selling Brazilian-made Corollas in Peru, executives said on Thursday, and is in advanced studies to export from Brazil to Chile and Colombia in a push to make its South American plants more competitive.

Steve St. Angelo, Toyota’s most senior executive in the region, said the exports to Peru were part of a long-term plan to integrate Brazilian operations with the rest of Latin America, which has long imported Corollas from the United States.

Toyota’s Brazilian factories, which exported only to Argentina when St. Angelo arrived in 2013, also send the mid-sized Corolla sedan and smaller Etios to Uruguay and Paraguay now.

Toyota has invested in a new engine plant and engineering facilities in Brazil, which St. Angelo said would be key to lifting the domestic content of the Corolla and Etios from about 60 percent currently. As Brazilian plants import fewer parts, they should be able to export more competitively to new markets, he said.

Rafael Chang, the company’s new chief executive in Brazil, said he hoped to have news “soon” on exports to Chile and Colombia.

Toyota’s exports from Brazil rose nearly 10 percent in 2016 to about 43,000 cars, of some 176,000 vehicles produced in the country last year.

“We’re trying to diversify our Brazilian operations, so we’re not so dependent on this one economy,” St. Angelo told journalists at a launch event for the new Corolla in Brazil.

Brazil’s worst recession in more than a century has nearly halved auto sales since 2012, battering automakers’ profitability and leading them to cut some 35,000 workers.

Auto factories in Brazil are still using less than half of installed capacity, as high unemployment and tight credit pinch demand. St. Angelo acknowledged that Toyota had struggled to turn a profit in the country during the recession.

“We’re not going to break even this year,” he said of the Brazilian business, adding that Toyota had not finalized its projections for the fiscal year. “We’ve been doing an unbelievable amount of cost cutting. Everyone is sacrificing.”

St. Angelo said an overhaul of Argentine operations had also diversified exports from that country beyond just Brazil to include Honduras, Guatemala, Peru, Chile and Colombia. (Reporting by Brad Haynes; Editing by Toni Reinhold)

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