Toyota says it will decide by 31 December whether and where to boost North American car capacity.
The most likely sites for a new plant are: Princeton, Indiana, and Cambridge, Ontario, Canada.
'What we're looking at is our options to expand production of whatever,' said Barbara McDaniel, spokeswoman for Toyota Motor Manufacturing North America Inc. in Erlanger, Kentucky.
Several Toyota models are selling better than expected in the USA. Camry sales are up 35 percent over 1998 volumes, while demand for the Sienna minivan is 26 percent ahead of last year.
Sales of the new full-sized Tundra pickup are rising faster than any other new product in Toyota's history, the company said last month.
In addition, the compact Corolla sedan remains one of the only bright spots in the US small-car segment. Toyota expects Corolla volume to continue growing, putting more demand on the two North American assembly lines where it is built - Cambridge and New United Motor Manufacturing Inc. in Fremont, California.
Cambridge builds just two models, the Corolla and the Solara. Toyota may decide that an additional plant there is feasible.
The Camry and the Sienna come from Georgetown, Kentucky, which is running overtime to meet sales forecasts.
Georgetown is able to oblige at the moment because production of the plant's third product - the Avalon - is winding down in preparation for a full redesign later this year.
Next year will be a different story, McDaniel said.
'We can't build anything else at Georgetown,' she said.
Princeton may have Toyota's most acute capacity problem.
The truck plant is scheduled to deliver 50,000 Tundras this year and 100,000 next year. In September 2000, the plant will launch a full-sized, Tundra-based sport-utility, with plans to produce around 50,000 units a year.
But Toyota may have to rethink that plan. Retailers are urging Toyota Motor Sales USA Inc. to build more than 100,000 Tundras. If Toyota agrees to build 150,000 instead, it suddenly will have no capacity for the new sport-utility.
Part of Toyota's current dilemma is whether to build an adjacent factory in Princeton to produce the sport-utilities.
Toyota Motor Corp.'s new president, Fujio Cho, says there is a '70 to 80 percent' chance that Toyota will build a new plant or expand its Princeton, Indiana, factory to respond to strong US sales.
Cho was speaking to reporters a few days after he became president of Japan's largest carmaker and former President Hiroshi Okuda became chairman.
Cho said Toyota is stretched to meet demand. 'Of all the plants we have, all are at full production except Indiana,' which is still ramping up, he said.
If Toyota decides to build a factory outside Indiana, the site search and plant construction would mean that production could not begin for two or three years, Cho said.
That is why Toyota must be convinced that the US market does not collapse just as a new line begins operation, he said.
With Toyota nearing its US sales target of 1.5 million, 'I think we have to redraw the target above that,' Cho said.
Cho is a former head of Toyota's manufacturing operations in Kentucky. He declined to give Toyota's worldwide market share target, saying only that the carmaker continues to aim for global sales of six million 'in the early part of the 21st century.'
American Honda Motor Co. Inc. is in a similar situation to Toyota. Honda realized earlier this year that sales were outpacing its North American production capacity.
Even as the automaker expanded its Alliston, Ontario, factory to build more of its new Odyssey minivans, Honda began searching for a site for another factory.
In May, Honda announced it would build an assembly plant in Lincoln, Alabama. However, even then, Honda said it has not yet decided which product the new factory will build: more Odysseys, or some Odysseys and some sport-utilities, or only sport-utilities.
Like Toyota, Honda says it is waiting until the end of the year to decide.