Toyota eyes engine exports to Malaysia

TOYOTA Australia hopes to export four-cylinder engines to Malaysia as it looks towards maximising its $330 million investment in a new engine plant at Altona in Melbourne.

The company has planned to export to Thailand since approving the new plant almost two years ago, but the recent signing of a new Free Trade Agreement with Malaysia has put that country on the Altona plant’s radar.

Initial trial-build 2.5-litre engines have just been produced at Altona in preparation for full-scale production at the end of this year.

Toyota Australia manufacturing executive director Chris Harrod said domestic and export markets were both vital for the new plant, which has a target of shipping out more than half its capacity of 110,000 units a year.

“Once we commence full production, the new plant will produce engines for our locally manufactured cars – Camry and Camry Hybrid – and open up new export markets in Thailand and Malaysia,” he said.

“The success of the first trial means we are one step closer to going into full production.

“The new engine plant is an Australian first for producing both petrol and hybrid engines. In fact, it is the first simple slimline engine plant to be built outside of Japan and reaffirms our position as a leading manufacturer.”

Australian-made engines could be fitted to Malaysian-built Camrys, which are assembled in Shah Alam by UMW Toyota Motor.

Exports of Australian-made automotive parts and components was a key objective in the signing of the Malaysia-Australia Free Trade Agreement (MAFTA) on May 22 this year by Australian trade minister Craig Emerson.

MAFTA was the result of seven years of talks between the two countries, but was greeted cautiously by some local automotive groups who said Australia had a poor record with FTAs and suggested the latest agreement was lop-sided in favour of Malaysia.

Malaysian car-maker Proton will benefit almost immediately by not having to pay Australia’s five per cent import duty for its cars from January 1, but Malaysia will only reduce its tariffs over a four-year period.

Toyota will also benefit from the Thai FTA that has been in operation since 2005 but has been largely a one-way street with a number of Thai-built vehicles – especially one-tonne utes – coming to Australia in increasing numbers.

Toyota Australia says the first trial build of 30 engines was designed to ensure all the new machinery installed at Altona would operate at capacity and that the engines would meet the company’s quality standards.

It also gave production, maintenance and logistics employees experience in relation to hybrid powertrains, which have been fully imported for the latest Camry since it went into local production late last year.

Toyota will build the 2.5-litre four-cylinder engine in two forms – a regular version for the Camry and one with an Atkinson combustion cycle for the Camry Hybrid.

Mr Harrod said the trial build was an important milestone for the company.

He said the new plant was unique in having casting, assembly and machinery all housed under the same roof to improve efficiencies.

The Altona engine plant – on the site of the older factory that was built in 1978 – was refurbished with co-investment from the Victorian government and $63 million from the federal government’s now-discontinued green car innovation fund (GCIF).

Engines from the new plant will replace imported units in the new-generation Camry and Camry Hybrid.