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Toyota working on more China output to meet 2 million sales goal

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Toyota, already planning to build one new assembly plant in China in 2017, is in talks to further ramp up production in the world’s largest auto market.

The Japanese automaker is weighing expansion in northern China, where it has a joint venture with FAW Group, to reach its goal of 2 million sales per year, Hiroji Onishi, chief executive officer of Toyota’s China business, said. Toyota said last week it will spend about 52.5 billion yen ($439 million) to add production in 2017 with Guangzhou Automobile Group Co.

“No concrete decision has been made, but just as in the case of our operations in the southern part of China, we continue to have discussions with our partners aiming at our growth over the medium term,” Onishi told reporters at the Shanghai auto show.

The Guangzhou plant will resume an era of factory expansion by Toyota, which hasn’t built a new assembly plant worldwide since 2013. President Akio Toyoda signed off on the plan announced last week after pressing the company to churn out more cars from existing factories to meet growing demand. The efficiency drive has helped put Toyota in position to report its second-straight year of record profit.

Earnings are improving even though Toyota has struggled to find traction in China. The carmaker sold 1 million vehicles in the country for the first time in 2014, two years behind schedule. Volkswagen AG and General Motors Co. each outsell Toyota locally by 3-to-1.

Capacity plans

Once production of a to-be-named model begins from 2017 in Guangzhou, Toyota will have local capacity to build about 1.1 million vehicles.

Volkswagen, which may pass Toyota to become the world’s top-selling automaker this year, plans to be able to make 5 million vehicles annually in China by 2019.

Market conditions in China have turned less favorable since the second half of last year under the government’s “new normal” policy orientation, Onishi said today.

“We don’t intend whatsoever to slow down or stop our approach aiming at 2 million sales units, but at the same time we will very carefully and closely observe the new normal conditions,” he told reporters.


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