Despite the shrinking market, Toyota still plans to build a new factory in Japan.

[PCauto] Toyota Motor Corporation has officially announced plans to build a brand-new automobile manufacturing plant in the Teihoucho area of Toyota City, Aichi Prefecture, Japan.

This will be Toyota’s first new factory built on Japanese soil since 2012 and is expected to begin operations in the early 2030s.

Reasons Behind This Decision

Notably, this investment comes amid a continued decline in domestic car sales in Japan. Data shows that factors such as a shrinking population and a decrease in vehicle ownership have caused Japan’s domestic automobile market to contract in recent years.

Toyota has consistently maintained a policy framework to keep an annual production capacity of 3 million vehicles in Japan, with about half of that volume exported to overseas markets such as Indonesia.

Global production data for 2025 shows Toyota’s worldwide output reached 4.9 million vehicles, a year-on-year increase of 5.8%, with domestic production in Japan growing by 8.7%. This strong performance likely provided confidence for the decision to build the new factory.

The specific models to be produced are yet to be finalized.

According to Toyota’s statement, the project will be advanced through close cooperation with Aichi Prefecture, Toyota City, local residents, and other stakeholders.

The new factory may focus on producing electrified vehicles, aligning with Toyota’s strategic shift toward becoming a mobility company offering connected, autonomous, shared, and electric technologies. Currently, Toyota sees strong demand for hybrid models in the North American market, while its new energy vehicle business is also growing in China.

In its statement, Toyota emphasized that the new factory will be built using cutting-edge technologies to create a “factory of the future,” providing an ideal work environment for a diverse workforce. As an active supporter of the United Nations Sustainable Development Goals, Toyota affirmed its commitment to its corporate philosophy by striving to build a safer, greener, and more inclusive society through innovative mobility solutions.

Important Part of Toyota’s Broader Business Restructuring

With the advancement of the new plant project, Toyota will continue investing in technological innovation. In June 2025, the Toyota Group announced the privatization of Toyota Industries Corporation to accelerate internal collaboration and drive its transformation into a mobility company.

Toyota’s recent collaborations—including the development of a hydrogen fuel cell concept model with Harvia and the addition of 12 new partner companies to the Woven City project—highlight its ongoing exploration in new energy and future mobility technologies.