Japan's biggest carmaker Toyota Motor Corp yesterday said that it has agreed with China's Guangzhou Automobile Group to spend 1.9 billion yuan (US$234.5 million) in expanding production capacity for their engine joint venture.

Annual production capacity of the engine joint venture, located in Guangzhou, capital of South China's Guangdong Province, will increase to 500,000 units from 300,000 units at present, Toyota said yesterday in a statement to China Daily.

The venture's expansion plan, which has been approved by Chinese regulators, is in response to increased global demand for the AZ 2.0 and 2.4-litre engines, Toyota said.

Registered capital of the venture will increase to US$208.6 million from US$132.9 million currently, the carmaker said.

Equity structure of the venture will remain unchanged following the new capital injection with Toyota holding 70 percent and Guangzhou Automobile 30 percent, Toyota said.

The venture, launched in February 2004, started to produce engine parts in January this year and complete engines this month. It is expected to make 25,000 engines this year.

Engines produced by the venture will supply both Toyota's car venture with Guangzhou Automobile and be exported to Japan, Toyota said.

In September 2004, Toyota and Guangzhou Automobile formed a car joint venture in Guangzhou with a planned annual production capacity of 100,000 units initially. The venture will start to produce the Camry mid-sized sedans in the middle of next year.

Toyota has increased its efforts in China since it has the biggest car market growth potential in the world.

The carmaker has announced that it aims to control 10 percent of the Chinese auto market by 2010, up from 2 percent at present.

Last year, Toyota sold a total of more than 100,000 cars in China, much less than Volkswagen and General Motors, the current leaders in the world's No 3 vehicle market.

Toyota also has joint ventures with First Automotive Works Corp (FAW), China's top vehicle manufacturer, to produce Vios and Corolla compact sedans, Reiz mid-sized sedans, Crown luxury sedans, Land Cruiser sport utility vehicles and Coaster buses.

The Japanese carmaker plans to produce its Prius petrol-electric hybrid sedans with FAW at the end of this year.

Sales of made-in-China vehicles grew by 10.61 percent year-on-year to 3.64 million units in the first eight months of this year.

(China Daily October 19, 2005)