Toyota unveils $700 million R&D unit in China

Toyota unveils $700 million R&D unit in China

Tokyo: Toyota said Wednesday it will invest nearly $700 million in its first fully-fledged research and development base in China in a bid to expand its share of the world’s largest auto market.

The world’s biggest automaker hopes to build cars that better fit the taste and demand of Chinese motorists, while the company tries to put this year’s global recall crisis behind it.

Toyota Motor Engineering & Manufacturing (China) Co. Ltd. will build the plant at an economic development zone in Changshu, near Shanghai, with plans to begin operations in the spring of 2011.

“It will be Toyota’s first full-fledged research and development company in China," a spokeswoman for the Japanese auto giant said in Tokyo.

Toyota plans to invest $689 million to buy land, build research facilities and a test track, the spokeswoman said.

The new company will survey the Chinese auto market, study quality control at its local assembly plants and develop low-emission vehicles and engines for the local market.

The company plans to raise the number of employees from an initial 200 to 1,000.

China overtook the United States last year to become the world’s largest auto market in terms of units sold.

Auto sales hit 13.64 million units in 2009, up 46% on-year, and are expected to rise by a further 25% this year to 17 million.

“TMEC ... aims to tailor vehicles to the demands of Chinese consumers," Toyota said in a statement.

Toyota has enjoyed healthy sales in China this year, but its vice president Satoshi Ozawa told reporters earlier this month that China’s possible tightening policies require careful analysis.

Toyota will coordinate the unit’s activities with those of its existing research and development centres run by its Chinese joint ventures, the company said.

Asia has been one of major production pillars of Toyota, nearly equaling North America during the six months to September.

Toyota’s latest decision came as its sales rebounds from a sharp drop last year due to the global auto industry slowdown and massive safety recalls, which had tarnished its once stellar reputation.

The auto giant in late 2009 and early 2010 undertook a series of mass recalls of more than 10 million units worldwide.

Toyota officials have recently told Japanese media that the deep damage from the recall was weakening, but some analysts warned that the problem could still haunt the auto giant.

Lawyers of clients suing the company in the United States last month alleged that Toyota had secretly bought back some of the faulty vehicles in a bid to hide their defects from the public.