Toyota Motors (NYSE: TM) announced earlier this month that it would export it’s signature Camry from its U.S. production plant in Georgetown, KY to customers in South Korea. While this might seem impractical due to the increased distance between Kentucky and Korea versus the brand’s headquarters in Japan, a recent free-trade agreement between the US and Korea as well as a strengthening Japanese Yen make U.S. production more economical.
International Export Market
International exports, which currently comprise 15.6% of Toyota’s stock price, have been the company’s main growth strategy in recent years as the debt crisis has dramatically slowed spending in the U.S. and last year’s tsunami crippled the Japanese home market.
Toyota has been exporting vehicles from the U.S. since 1988. This new initiative will initially export 6,000 US-made Camry sedans per year to South Korea starting in January 2012. Approximately 100,000 US-made Avalon sedan, Sequoia SUV, and Tundra pick-ups trucks are also exported to various international markets yearly. 
Along with its competitors Nissan (PINK:NSANY) and Honda (NYSE:HMC), Toyota has been hurt in recent months due to the increasing strength of the Japanese Yen. While Toyota has long been an advocate of Japanese manufacturing, economic concerns may lead it to shift more and more production to overseas facilities, such as the US.
As Toyota works to reclaim the market share they lost during the recent recalls, maintaining margin will become paramount and economic concerns may displace patriotism in the eyes of Japanese shareholders, especially if the Yen continues to strengthen versus the US dollar.
Trefis analysis values Toyota stock at $76.44, about 15% ahead of the market price.Notes: