Alabama will be the site of a new $1.6 billion Toyota Motor Corp and Mazda Motor Corp auto plant, a victory for President Donald Trump who had prodded manufacturers to build new US facilities and threatened tariffs on foreign production, sources said on Tuesday. The plant, which will employ up to 4,000 people and produce about 300,000 vehicles a year, will be located in Huntsville, Alabama, and is a boon for the state, where Toyota has a large engine plant and an existing network of automotive suppliers.

A formal announcement by company and state officials is expected on Wednesday in Montgomery, sources briefed on the matter said. The new plant -in a state Trump won by 28 points in 2016 - could be a political boost to the Republican president, who has urged automakers to build plants in the United States and add jobs.

Trump tweeted in March he wanted "new plants to be built here for cars sold here." The announcement also comes at a time of declining US auto industry sales, so it could exacerbate overcapacity and add pressure to cut prices. US new vehicle sales fell 2 percent in 2017, after hitting an all-time record high in 2016, and are expected to fall further in 2018.

Details of an anticipated tax and incentive package for the investment were not yet known. It has been reported the companies sought at least $1 billion in incentives. A Toyota spokesman declined to comment, except to say an announcement was expected soon. A Mazda spokeswoman also declined to comment.

In recent months, the companies had narrowed their choices down to sites in Alabama and North Carolina.

Copyright Reuters, 2018