Toyota Motor Corp, on course to overtake General Motors as the world's biggest automaker, is well behind in the world's fastest-growing market -- and one where GM is thriving: China.
But tomorrow, Toyota hopes to take a key step toward catching up when it rolls out its first made-in-China Camry, the best-selling model in the US.
The launch, from Toyota's new 3.8 billion yuan (US$475 million) factory in Nansha, near Guangzhou, symbolizes the automaker's newfound ambitions for China, which is about to surpass Japan as the world's second-largest auto market.
Virtually unscathed by political friction that erupted into anti-Japanese riots last year, Toyota and fellow Japanese automakers Honda Motor Co and Nissan Motor Co, are pushing ahead with billions of dollars in new investments.
Toyota, a relative latecomer to China, has a paltry 3.5 percent of the market, with 179,000 vehicles sold last year.
That puts it well behind top foreign automaker General Motors Corp, which captured 11 percent of the market last year with 665,390 units sold, and Volkswagen AG of Germany, the No. 2 foreign maker.
Toyota is betting that -- as in the US -- the reliable, mid-sized Camry sedan will spearhead its growth in China, helping it reach 1 million units in sales, or a projected 10 percent of the market, by 2010.
"We are confident that the Camry is a good fit for the Chinese market," Toyota Motor Corp president Katsuaki Watanabe said this past week at a Tokyo reception for auto executives.
GM spokesman Dee Allen said the company was aware of Toyota's plans in China and sees the Japanese company as a tough competitor in any market.
"But we have a multi-brand strategy in China -- with Wuling, Chevrolet, Buick, Cadillac and Saab -- and our business results there have been very good. We've seen double-digit growth and we continue to expand," Allen said on Friday.
"I don't know that this is so much a case of GM defending its position as it is one of Toyota establishing one," he said.
With China's sizzling economy and swelling middle class, the auto market grew 30 percent last year to 5.7 million vehicle sales, according to local industry figures, just behind Japan's 5.8 million. US auto sales totaled 17.4 million last year.
That business potential is not lost on Japanese auto industry, which invested a total of ?113.7 billion (US$1.03 billion) in China last year, according to Japan's Ministry of Finance, more than any other sector.
Japan's No. 3 automaker, Honda, which began making Accords in Guangzhou in 1999, launched exports of its Jazz compact model to Europe a year ago.
To oversee its push into China, Toyota last year appointed Yoshimi Inaba, former head of its US operations.
And to help contain costs, Toyota plans to buy most parts for the Camry locally, with half coming from the region near Guangzhou. Its engine plant there is already exporting engines for Camrys built in Japan and the US.
The Camry will be produced in Toyota's newest plant, a joint venture with Guangzhou Automobile Industrial Group in Nansha, a port city 65km north of Hong Kong on the Pearl River.
That southern region around Guangzhou has become an offshore Japanese car manufacturing hub that is challenging Shanghai's self-designated status as China's auto city, with Toyota, Nissan and Honda all building up joint ventures, accompanied by dozens if not hundreds of parts suppliers.
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