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Lexus Considering U.S. Production

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2010 Lexus LS 600h L

2010 Lexus LS 600h L

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With the yen continuing to strengthen automakers are finding it increasingly difficult to build cars at a profit in Japan.

The situation is becoming so dire that Lexus is considering building more cars outside of Japan, a move it has so far resisted due mainly to pride. Note, the automaker currently builds its top-selling RX crossover in Canada.

The location Lexus is eyeing is the U.S., where most of its models are sold.

Europe’s two biggest luxury automakers BMW and Mercedes-Benz have been building cars in the U.S. for years, and now Infiniti is building its new 2013 JX crossover in the U.S. as well.

Fortune reports that Toyota CEO Akio Toyoda wants more compact Toyota models, the least profitable models in its lineup, produced outside of Japan, and that he acknowledges that more profitable Lexus models may follow.

Lexus’ U.S. chief Mark Templin said the decision was a complex one and that it will only be made by execs in Japan. He admitted that Toyota’s pride in building its most prestigious models in its home country would be difficult to overcome, however.

Importantly, new production locations would not only hedge against fluctuating currencies, it could also help insulate manufacturers from situations like the recent Japanese earthquake and tsunami disasters, which proved devastating to Toyota and most other Japanese makes this year. Additionally, cars could be delivered to customers faster.

Next month Lexus’ global marketing functions will be handled by its team in Torrance, California, and there are suggestions that this could just be the start of a complete Lexus managerial move to U.S. soil.

And Lexus is certainly not alone in its Japanese exodus. In addition to Toyota looking to build more models outside its home market, Renault-Nissan boss Carlos Ghosn has repeated stated that unless the Japanese government addresses the issue of the strengthening yen, which has risen 9 percent in the past six months alone, more and more manufacturing will be forced to exit Japan.
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