Toyota to Expand Production in China

Tokyo February 26, 2007; The Asahi Simbun reported that after a relatively slow start in the Chinese market, Toyo-

ta Motor Corp. is aiming to increase production and carve out a bigger share for itself.

The company has already alerted makers of component parts that it will increase the range of vehicles it makes in China from nine to 12 by 2009.

The company aims to offer Chinese buyers a broader range and take a 10-percent slice of sales by 2010.

It will open two new plants, one at Guangzhou and one at Tianjin, to manufacture sport utility vehicles.

Toyota started building automobiles in China in 2000. Sedans and large SUVs with engine capacities of more than 3.5 liters have been its core models.

However, the company now wants to respond to changes in environmental regulations and consumer demand. Toyota judged that it was "necessary to reduce the size of the models it is producing and to expand its product lineup," a senior executive said.

In the autumn of 2006, the production capacity of Toyota's first plant in Guangzhou doubled to 200,000 vehicles. In the middle of 2008, the plant will add the 1-liter class Yaris subcompact vehicle (known as the Vitz in Japan) to its production lineup.

By 2009 Toyota's second Guangzhou plant will be on stream, with annual production capacity of 100,000 vehicles. It will produce the 3-liter SUV, the Highlander (called the Kluger in Japan).

At its new plant in Tianjin, the third Toyota plant in the city, the company will produce its small 2.4 liter SUV, the RAV4 along with the Corolla. The Tianjin plant is slated to start operations this summer.

Toyota intends to produce the Highlander at a new North American plant, the company's eighth, which it will set up in the southern United States, and the RAV4 at its second Canadian plant, which will open in 2008.

Up until now, both the vehicles have been produced only in Japan. Under the new plan, Toyota will produce them at their three bases of North America, China and Japan. Global sales of SUVs total about 500,000 annually.

The company hopes the move will help stave off trade friction. Last year Toyota exported 2.52 million vehicles, a record high.

Also behind the move is the fact that Toyota feels it has been slow to carve out its place in China. It ranks 6th among automakers, with only 6.5 percent of the market. The third biggest seller, Hyundai Motor Co. of South Korea, has 9.9 percent, and local manufacturer, Chery Automobile, ranked fifth, has 7.1 percent.

In 2006, the Chinese vehicle market surpassed Japan's to become the second largest in the world