Toyota Motor Corporation (TM, Financial) is contemplating manufacturing its next-generation RAV4 SUV in the United States. This move is part of a strategy to mitigate the impact of U.S. tariffs on imported vehicles. Currently, Toyota produces the popular RAV4 in Kentucky, Canada, and Japan. Initially, the company planned to export the new RAV4 model from Canada and Japan to the U.S., but it is now considering production in Kentucky.
By increasing U.S.-based production, Toyota aims to alleviate the effects of President Trump's 25% tariff on imported vehicles, which significantly impacts Japanese automakers. Additionally, this strategy could help manage potential cost increases due to fluctuations in the yen exchange rate. Toyota plans to launch a redesigned 2026 RAV4 model later this year, marking the first redesign since the fifth-generation model in 2019. The exact U.S. launch date remains unannounced.
While Toyota has not finalized its production plans, any changes will require long-term planning due to the substantial time and resources needed to restructure manufacturing facilities and adjust supply chains. If Toyota proceeds with the Kentucky production plan, it could commence in 2027. Despite these changes, Toyota's overall vehicle production in Canada is expected to remain stable.
