Toyota Boosts Chinese Eco-friendly Car And Engine Output With $2.2 Billion Investment

Toyota USA
The Toyota logo is seen on a new Corolla model at the 89th Geneva International Motor Show (Photo: Reuters)

Toyota Motor Corp. plans to invest over $2.2 billion to boost eco-friendly vehicle and engine production in China with a local partner to meet growing demand. The company's Chinese partner, Guangzhou Automobile Group Co. said that they plan to add 400,000 units to its annual production capacity for eco-friendly cars at GAC Toyota Motor Co. in Guangzhou, southern China

GAC Toyota Motor is equally owned by Toyota and its Chinese partner. The joint venture will invest $1.6 billion to expand production capacity in two phases which will be completed in 2020. According to Toyota, the output of its brand cars, including hybrid Camry sedans, at its manufacturing unit in Guangzhou totalled 599,000 units in 2018.

The statement of the company said that the partnership will step up engine production at GAC Toyota Engine Co. in the capital of Guangdong province. The joint venture plans to allocate $605 million to add 432,000 engines to the annual output capacity by 2021 as part of the efforts of the company under the Toyota New Global Architecture. It is a program which is aimed to enhance product quality and reduce costs with the introduction of a new vehicle platform.

A spokesman from Toyota Motor (China) Investment Co., a local unit in charge of public relations and other activities, said that they will implement various measures to accelerate business in China. The China Association of Automobile Manufacturers said that 2018 sales of new-energy vehicles, like electric vehicles and hybrid cars, in China surged 61.7 percent to 1,256,000 units.

Toyota's total production in China reached 1.16 million vehicles in 2018, including output from a joint venture with China FAW Group. The total, however, includes few electric cars or plug-in hybrids. The GAC Toyota plant expansion will lift the capacity by 30 percent to 1.56 million vehicles. The new car sales of the Japanese automaker in China increased by 14 percent in 2018 to 1.47 million units.

China is the world's leading market for green cars after selling 1.25 million in 2018. The Chinese government plans to raise its sales to 7 million by 2025. The Chinese government required companies to produce more environmentally friendly cars is they plan to increase the sales of their gasoline running models. As a result, Toyota adapted its product planning strategy to government policy. The GAC Toyota started its sales of plug-in hybrids in February and it is planning to release electric vehicles within this year.

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