Toyota will spend $1 billion on an assembly plant in Guanajuato, Mexico, and move production of its popular Corolla sedan there from another plant in Cambridge, Ont.

The Mexican factory will have the capacity to crank out 200,000 cars a year, bringing an end to the production of the Corolla in Canada. It is one of the bestselling cars in the country and had been built here since the plant opened in the 1980s.

Toyota has made more than three million Corollas in Ontario since opening its first plant, but after production ends there, all Corollas sold in North America will be built either in the Mexican plant or an existing one in Mississippi.

New role for Cambridge plant

Toyota said Wednesday's news doesn't mean the end for the Cambridge plant, however. It will "switch from producing Corollas to mid-sized, higher-value vehicles," although a release Wednesday doesn't specify which ones.

The two plants currently produce Lexus models, the RAV4 sport-utility vehicle and the Matrix hatchback, in addition to the Corolla.

"We are thrilled to invest further in North America so we can better meet the needs of our customers for decades to come," said Jim Lentz, chief executive officer of Toyota's North American unit.

Toyota Milestone-Mississippi

A worker checks a Corolla at Toyota's Mississippi plant. Production will shift there and to the new Mexico plant. (Rogelio V. Solis/Associated Press)

"Transforming our Canadian vehicle assembly plants is an equally important part of our strategic plan to position the North America region for sustainable long-term growth."

Toyota recently invested $100 million into the Cambridge-area facilities, which the company says added about 400 new jobs while introducing hybrid production and increasing capacity at the plants.

The Toyota plant is not unionized, but Jerry Dias, president of autoworkers union Unifor, said the company's decision is a "huge loss" for Canada.

"You can't take the No. 1 selling vehicle that Toyota has in North America out of an assembly plant and somehow think that it's going to be fine, because it's not going to be. You can't replace that kind of production," he said in an interview with CBC's The Exchange with Amanda Lang.

Dias said Canada has gone from a surplus in auto trade to a deficit, and it will only get worse unless government steps up on the issue.

"On the whole issue of the auto industry in Canada, we'd better make some decisions and we'd better do it fast. We have lost two assembly plants in the last five years, Mexico have picked up seven," he said. 

The government of Ontario put a positive spin on the news, noting that Toyota has a long history in the province and there's no indication that Wednesday's news changes that.

"Toyota has been a great partner and contributor to Ontario's economy since first opening here almost 30 years ago, and since that time, they have invested almost $7 billion, creating thousands of jobs," Economic Development Minister Brad Duguid said.

"We have been assured that with today's announcement, Toyota will continue investing in the province, and ensure that Ontario plays a key role in Toyota's sustainable, long-term growth in North America."

The first Corollas from the 2020 model year will start rolling off the line in Mexico some time in 2019.

Separately, Toyota said Wednesday it will be adding a third production line to its existing plant in Guangzhou, China, at a cost of about $440 million. That line is to be completed by 2017, for a model the company declined to disclose.