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Toyota China Sales Jump in May, Mulls New Factory

Toyota Motor said sales in China jumped 87% in May, driven by the popular Camry sedan, and it was discussing a second car factory with Guangzhou Automobile in anticipation of continued strong growth in demand.

Excluding Hong Kong, Chinese vehicle sales at Japan's top automaker came to 33,000 units last month, a spokeswoman said on Thursday. For the first five months of 2007, sales surged 76% to 176,000 units.

Toyota , one of the fastest-growing brands in China and on its way to becoming the world's biggest automaker, expects sales in China to rise 43% to 430,000 units this year, also fuelled by the new Corolla sedan, production of which began last month at a third factory with its other local partner, FAW Car.

With demand for the Camry firm and another mass-volume model, the Yaris subcompact, to be added to Toyota's 50-50 joint venture with Guangzhou Auto in mid-2008, the partners are discussing details to apply for a second factory, Toyota said.

"We are in discussions over a second plant," the spokeswoman said. She noted that the process of gaining state approval for car factories could last as long as two years.

The partners, whose existing factory in Guangzhou has a production capacity of 200,000 units a year, are aiming to sell 150,000 Camrys in 2007 and about 80,000 to 90,000 units of the Yaris annually, long raising speculation that a second factory would be required in the near future.

Toyota wants to boost its share of China's vehicle market to 10% by 2010 from around 4% last year, a goal that could translate into sales of 1 million units. Toyota's total production capacity in China stands at 640,000 units now.

Toyota's executive vice president in charge of Chinese operations, Yoshimi Inaba, told Reuters in April that the Guangzhou factory would be able to build up to 240,000 vehicles annually with overtime and tweaks to work shifts.

He was cautious about a second plant, saying Toyota would consider one only when it was assured of annual Camry sales of around 200,000 units. For the first five months, Toyota sold 64,000 Camrys, roughly in line with this year's plan.

Inaba had cautioned that the competitive tide tended to turn abruptly in China as rival products entered the market. The Camry's main competitor, Honda Motor's Accord, is due for a remodeling next year.

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