Toyota to increase production capacity in China by 20 percent - source

By Norihiko Shirouzu

BEIJING (Reuters) - Japan's Toyota Motor Corp will build additional capacity at its auto plant in China's Guangzhou, a company source said, in addition to beefing up production at a factory in Tianjin city by 120,000 vehicles a year.

A person close to the company said Toyota will build capacity at the production hub in the south China city of Guangzhou to also produce an additional 120,000 vehicles a year, an increase of 24 percent over current capacity.

All together, between the eastern port city of Tianjin and Guangzhou, Toyota will boost its overall manufacturing capacity by 240,000 vehicles a year, or by about 20 percent.

Toyota's production capacity in China is 1.16 million vehicles a year.

Reuters reported earlier this week that Toyota plans to build additional capacity in Tianjin to produce 10,000 all-electric battery cars and 110,000 plug-in hybrid electric cars a year.

China has said it would remove foreign ownership caps for companies making fully electric and plug-in hybrid vehicles in 2018, for makers of commercial vehicles in 2020, and the wider car market by 2022. Beijing also has been pushing automakers to produce and sell more electric vehicles through purchase subsidies and production quotas for such green cars.

Toyota's planned additional capacity in Guangzhou is also for electrified vehicles, said the company source, who declined to be named because he is not authorised to speak on the matter.

The source did not say how much the additional capacity would cost. The Tianjin expansion is likely to cost $257 million, according to a government website.

The planned capacity expansions in Guangzhou and Tianjin are part of a medium-term strategy of the Japanese automaker that aims to increase sales in China to two million vehicles per year, a jump of over 50 percent, by the early 2020s, according to four company insiders with knowledge of the matter.

The plans signal Toyota's willingness to start adding significant manufacturing capacity in China with the possibility of one or two new assembly plants in the world's biggest auto market, the sources said.

Car imports could also increase, they said.

In addition to boosting manufacturing capacity, Toyota also plans to significantly expand its sales networks and focus more on electric car technologies as part of the strategy, the sources said, declining to be identified as they are not authorised to speak to the media.

(Reporting by Norihiko Shirouzu; Editing by Raju Gopalakrishnan)