Toyota Paves Road for First U.S.-Built Lexus in Kentucky

Lexus_ES350

Toyota Motor Corporation (NYSE:TM) announced it was bringing production of its popular Lexus ES 350 to its Kentucky production plant back in April 2013. As of January 8, construction officially began of the automaker’s first Lexus assembly line in the United States with workers at the Kentucky plant expected to produce the first car at company plants in late 2015.

Toyota’s introduction of Lexus production to the United States will deliver the Bluegrass State 750 jobs through an investment of $360 million, the automaker said in a company statement. The Toyota Motor Manufacturing Kentucky plant is located in Georgetown, where the automaker builds several models of the Camry, Avalon, and Venza. Toyota opened its Kentucky operation in 1988.

The choice of the Lexus ES 350 as the plant’s focal point in production comes as no surprise. Lexus sold 72,581 units of the ES 350 in the United States in 2013, which amounted to a gain of 29 percent over its 2012 stats. Lexus ES models, which include the ES 300 hybrid and the ES 350 — combined as the fourth best-selling luxury car in the United States in 2013. By the time the plant is operational in the fall of 2015, Lexus may be able to supply two-thirds of that U.S. demand with its Kentucky plant.

Lexus_ES350_EXT_E3-1453_1024x576According to Lexus, the Georgetown facility will produce 50,000 units of the ES 350 (its best-selling sedan) annually. Lexus as a brand trailed only BMW (BMAXY.PK) and Mercedes (DDAIF.PK) in sales among American luxury buyers in 2013, with sales gains for all three hovering around an increase of 2 percent. As a point of reference, Lexus bested GM’s (NYSE:GM) Cadillac division by 91,000 units, and Lexus pummeled Volkswagen’s (VLKAY.PK) Audi brand by 115,000 vehicles sold to U.S. buyers in 2013.

Though Toyota succumbed to Ford (NYSE:F) in China sales last year, the Japanese automaker put up impressive numbers in the U.S. market as it claimed the title of top retail brand for 2013. The midsize Camry remained the best-selling car in the United States while the Toyota brand as a whole grew 7 percent. The expansion of production to Kentucky will ease the burden on foreign deliveries and improve the automaker’s brand image in the U.S. heartland.

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