Rumor: Toyota Packing Up California HQ, Moving To Texas To Cut Costs

April 28, 2014

Over the weekend, rumors emerged that Toyota is planning to pack up its U.S. headquarters in Torrance, California and move to Plano, Texas, near Dallas.

Toyota has yet to confirm those rumors, but Bloomberg says that if true, the shift may be designed to help the automaker cut costs. However, money isn't the only factor at work here.


Bloomberg suggests that Toyota's plan would shift the majority of its California operations to Texas over a two-year period. Some of the company's 5,300+ California-based employees would be let go or bought out. Others may make the move to the Lone Star State.

It's not clear whether the 4,000+ employees that work with Toyota's financial arm -- also based in California -- would be affected.


After 57 years in California, why would Toyota pick up stakes and move halfway across the country? We can think of at least three good reasons. 

Taxes: Texas is one of only three states in the U.S. with no corporate income tax (though it does generate taxes from businesses in other ways, including franchise taxes). California, on the other hand, has a corporate tax rate of 8.84 percent. According to the Tax Foundation -- a conservative-leaning group that describes itself as a "non-partisan research think tank" -- Texas is the 11th-most business-friendly state in the country, while California clocks in much, much lower, at #48. In other words, moving to Texas should save Toyota some cash.

Other facilities: Though Texas isn't the most business-friendly state in the U.S., it is home to Toyota's truck plant, located in San Antonio. The company could've moved anywhere -- like, say, the #1 spot for business, Wyoming -- but it makes some sense for Toyota to shift to Texas, where it already has a presence.

Maturing company: As Forbes' Dale Buss points out, Toyota and its Asian rivals initially set up shop in California for practical reasons -- namely, it was closer to their home bases, and it was where more of their shoppers lived. But decades later, Toyota is the #3 automaker in the U.S. in terms of sales and market share. It has customers across America, so it makes perfect sense to re-locate nearer the heart of the country. And due to advances in air travel and telecommunications -- not to mention the internet -- getting to or communicating with Tokyo is just as easy from Texas as from Torrance.

Bloomberg says that Toyota employees in California were informed of the move yesterday, but so far, nothing official has been published. 


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