(Adds Mexico market plans 9-10)
TIJUANA, Mexico, Sept 20 (Reuters) - Toyota Motor Corp. said on Friday it will invest $140 million in its new manufacturing plant in Mexico to produce 20,000 small pickup trucks annually, in the latest challenge to U.S. automakers' grip on a key segment of the market.
Japan's largest automaker said that it will begin building Tacoma pickup trucks in 2005, with a work force of 460, on a new assembly line at its new truck bed plant at a 700-acre site it owns outside this border city just south of San Diego.
Toyota said the facility will also have capacity to build 170,000 truck beds for the Tacoma small pickup truck to be used at its plants in Mexico and the United States. Toyota began building a plant to make truck beds there earlier this year.
Toyota executives said this month they planned to build another assembly plant in North America as part of plans to boost their global vehicle market share to 15 percent from 10 percent over the next decade. Much of that growth is targeted for North America.
Toyota already sells a full range of vehicles, including pickup trucks, minivans and sport utilities, in the United States, but executives have said that there's room for further expansion.
"This announcement expands our commitment to Mexico and the production increase will allow us to meet the strong demand for Tacoma in the U.S.," Atsushi Niimi, president of Toyota Motor Manufacturing North America, said in a press release.
In August, Toyota recorded its best sales month in its 45-year history of selling vehicles in the U.S. market. Toyota's U.S. sales through the first eight months are up 4.1 percent for a market share of 10.5 percent.
Toyota began selling vehicles in Mexico this year with the launch of the Camry mid-size car in April and the Corolla small car in June.
Toyota executives said in a presentation in Mexico City that they also planned in the future to sell part of the Tacoma production to the domestic market.
"As the (Mexican) market continues to expand more, we'll come," said Jim Wiseman, Vice President of Toyota Motor Manufacturing of North America.
Toyota is also scouting U.S. states for another location for an additional vehicle assembly plant in North America. The Arkansas state legislature may call a special session in order to approve tax and other incentives to help the state win a Toyota factory, the Arkansas Democrat-Gazette reported on Friday.
Eight states have been cited as possible locations for the new Toyota factory: Texas, Arkansas, North Carolina, Alabama, Georgia, Mississippi, Tennessee and Virginia.
The Birmingham News in Alabama reported this week that economic development officials have said that Toyota will invest between $500 million and $750 million to build an assembly plant with 2,000 workers.
All of Toyota's proposed plant sites are away from the Midwest, the stronghold of the United Auto Workers union. Many foreign automakers, including Honda Motor Co. Ltd. , Hyundai Motor Co. Ltd. , Nissan Motor Co. Ltd. and BMW AG , have built or are planning to build vehicle assembly plants in southern U.S. states.
Many of the new plants build trucks, specifically sport utility vehicles, the fastest growing and most profitable part of the U.S. market. American automakers still sell the majority of trucks and SUVs, but have been losing market share to the foreign automakers such as Toyota.