Toyota Motor Corp is investing $172 million to increase North American production of small four-cylinder engines, at a time when the U.S. market shows signs of recovering from its worst downturn in decades.
Toyota said on Friday that it would spend $147 million at its Huntsville, Alabama, engine plant to more than double annual capacity there to 577,000 engines.
The plant, which currently builds bigger V8 and V6 engines only, will start building more fuel-efficient four-cylinder engines beginning in the summer of 2011. The engines will be used for its Camry sedans and RAV4 SUVs.
Toyota will also spend another $25 million at its aluminum casting plants in Troy, Missouri, and Jackson, Tennessee, to expand output of engine components such as cylinder heads and blocks.
The expansion in North America, which Toyota estimates will create about 300 jobs, comes as the Japanese automaker tries to move production closer to where it sells in an effort to hedge against the strong yen.
U.S. auto sales rose to their highest rate of 2009 in July, boosted by the U.S. government's "Cash for Clunkers" incentives offering up to $4,500 to people who trade in old gas guzzlers for more fuel-efficient vehicles.
Analysts and auto industry executives have forecast August would show a better selling rate than last month, bolstering expectations that the worst of the downturn had passed.
