TEXT OF STORY
STEVE CHIOTAKIS: A day after the company announced a massive recall of a million and a half of its vehicles, Toyota has announced it'll start producing the Prius in Thailand next month. That's going to mark the first time the hybrid will be mass-produced outside of Japan. Marketplace's China Bureau Chief Rob Schmitz explains why.
ROB SCHMITZ: A move to sunny, tropical Thailand may seem like the perfect therapy for a company plagued by recalls. But Toyota is not going to Thailand for the beaches. Auto industry expert Bill Russo says a rise in currency is cutting into profits at home and Toyota needs to lower production costs because it's through selling with selling the Prius to a niche market.
BILL RUSSO: If you're going to successful in mass marketing these types of vehicles, you need to seek economies of scale which comes from larger production footprints in low-cost markets like Thailand.
The move is part of a broader plan at Toyota to sell a million hybrid vehicles a year. So why not seek that economy of scale in a low-cost market like China? First, China forces foreign automakers to enter into joint ventures with Chinese companies. Secondly, hardly anyone in China wants to buy a Prius. Toyota shut down a small assembly plant in China last year due to terrible sales there.
In Shanghai, I'm Rob Schmitz for Marketplace.