China's No. 1 car company talking with Toyota


Toyota already has a partner at the low end of the market in China but does not yet have ties on high-end vehicles

By Alex Frew McMillan

HONG KONG, China -- China's largest carmaker, FAW Group Corp., is in talks to link with Toyota Motor Corp., the largest carmaker in Japan.

The aim is to link on a high-end car model, seen by industry watchers as the fastest growing section of the market. Toyota already has a small-car partner in China.

But Toyota stated on Thursday that the talks with FAW Group are still ongoing.

China FAW Group makes the Hong Qi car at the upper end of the market. If the talks go ahead, the car companies expect to set up a luxury car plant in Tianjin, China.

"Nothing has been decided yet," a spokesman told Reuters news agency.

Popular with China's VIPs

The joint venture would then produce a successor to Hong Qi, which is popular with Chinese executives and dignitaries.

Toyota also hopes to introduce its popular four-wheel drive LandCruiser vehicle, which sells well around the world to relatively affluent buyers.

The Tianjin joint venture will likely begin operations in 2005. The talks also aim to develop a broad alliance between FAW and Toyota.

Suzuki, the largest minicar maker in Japan, said on Monday that it will expand production at its plan in Chongqing, China (full story).

Toyota currently partners with Tianjin Automotive Industry Corp., which plans in October to start producing cars. It will then ramp up production to some 35,000 cars per year.

Japan makers looking at China

Fujio Cho, president of Tokyo-based Toyota, has stated that his company is considering various options for expanding in China, which it considers an increasingly important market.

Toyota already builds buses there. Honda Corp., a major Toyota rival, already produces 55,000 cars in China per year.

Japan's third-largest automaker, Nissan Motor Co Ltd, is expected to soon close an agreement with China's second-biggest auto group, Dongfeng Motor Corp, to produce a wide range of vehicles.

FAW builds 300,000 vehicles a year, making it the largest manufacturer of Chinese-brand cars. It also makes 130,000 cars a year in a partnership with Volkswagen.

Toyota stock is down 0.9 percent at 3,310 yen in early afternoon trade in Tokyo, on a day the Japan market as measured by the Topix index is down 0.4 percent at 1111.76.