Toyota Motor Corp founded its first wholly owned R&D unit in China on Nov 17 to strengthen its localization in the country.

The facility by newly established Toyota Motor Engineering & Manufacturing Co Ltd (TMEC) in Changshu near Shanghai will begin partial operations in the spring of next year, the company said.

Toyota plans to invest $689 million in the new R&D arm, which will have a staff of about 200 working for the company in its initial stage. The number will eventually increase to 1,000, according to a company news release.

The statement said the R&D center will survey local vehicle use and customer demand, then make product plans based on the information collected.

Studying energy-efficient and new energy vehicles will also be a primary task. It will develop engines for the local market and implement quality testing on models introduced to China.

Massive recalls by Toyota beginning late last year - including in China - damaged the brand's reputation.

The world's largest automaker then established a special committee to enhance quality control and rebuild customer trust.

"The new R&D center has no direct relation with previous recalls since we have other special measures to improve quality control, but it will surely help bolster the quality of our products," said Niu Yu, spokesperson for Toyota China.

"The purpose of setting up TMEC is to provide products that meet local customer demand, which are friendly to the environment and safe," the company said in its statement.

The new center will work jointly with existing R&D facilities at Toyota's China joint ventures, it added.

Existing facilities

Toyota recently set up an R&D center in Tianjin at its joint venture with FAW Group Corp. It also has an R&D department in the partnership with Guangzhou Automobile Group Co.

Analysts noted that the new move could help Toyota catch up in localized development for the world's largest auto market.

Its global rivals Volkswagen and General Motors both have advanced R&D facilities in China. GM's Pan Asia Technical Automotive Center, established in 1997 with SAIC Group, is the biggest auto R&D operation in China.

In the first 10 months to October, Toyota sold about 644,000 cars in China, according to statistics provided by the company. It aims to deliver 800,000 vehicles in China this year, up from 709,000 last year.

GM's 2010 China sales are certain to break the 2 million benchmark. Volkswagen's China delivery this year is also likely to hit 2 million.

Toyota's new company in China is the auto giant's fifth large wholly owned R&D center outside Japan. Others are located in the US, Belgium, Australia and Thailand.