Guangqi Toyota Engine Co., Ltd. to Increase Production Capacity

Tokyo ― TOYOTA MOTOR CORPORATION (TMC) and GUANGZHOU AUTOMOBILE GROUP CO., LTD. (Guangzhou Automobile) announced today an agreement to increase production by building a second production line at Guangqi Toyota Engine Co., Ltd. (GTE), a joint venture company TMC established with Guangzhou Automobile to produce automobile engines. The agreement was made in response to increased global demand for the AZ engine (2.0-liter and 2.4-liter gasoline engines). Investment in the new line, which was granted permission by the Chinese government on October 11, will raise annual engine production capacity from the current 300,000 engines to 500,000 engines.

TMC and Guangzhou Automobile also agreed to raise GTE's capital by 75.7 million U.S. dollars (approximately 8.1 billion yen), with TMC providing 52.99 million U.S. dollars (approximately 5.7 billion yen) of the new capital. Ownership ratios of the Toyota Group and Guangzhou Automobile will not change after the capital increase, which is planned to begin the end of this year and continue through to the middle of next year.

The second GTE production line will begin manufacturing crankshafts, camshafts and other engine parts in mid-2006, with plans to start producing complete engines at the end of 2006. In addition to using the engines in vehicles produced in China, plans also include exporting the engines to Japan. The total investment for the construction of the second line will be approximately 1.9 billion yuan RMB (approx. 25 billion yen) and will add approximately 570 new jobs.

In September 2004, Guangzhou Automobile and TMC established a production and sales base, Guangzhou Toyota Motor Co., Ltd., which is scheduled to begin production of the Camry model equipped with GTE-manufactured AZ engines in mid-2006.