Toyota to open plants in China and Mexico

After years of soul-searching over an expansion policy that had led to quality lapses, Toyota is ready to move on again.

The Japanese carmaker is planning to spend about Y150bn ($1.3bn) to build new plants in Mexico and China in a bid to capture growth in the world's two biggest auto markets people familiar with the plans said on Friday.

Toyota joins rivals worldwide including Volkswagen, General Motors and Volvo in adding manufacturing capacity in North America.

The two plants are expected to expand Toyota's annual production capacity by up to 300,000 vehicles with the facilities opening in China in 2018 and in Mexico in 2019, according to the company.

The move will mark an end to Toyota's three-year moratorium on building new manufacturing plants, which runs through March 2016, and follows efforts to simplify and streamline its plant-building.

Similarly, Swedish carmaker Volvo recently said it plans to invest $500m to build a new factory in the US, while GM announced it would build its Chevrolet Cruze in Mexico. Last month, Volkswagen said it will invest about $1bn in its plant in Mexico to produce the new Tiguan compact.

President Akio Toyoda has said the company was in a phase of "intentional pause" as he shifted the company's focus to profitability and quality rather than breakneck expansion, which he saw as a factor behind the massive vehicle recalls from late 2009.

The Japanese company is working to reduce costs and make car production more efficient through a revamped manufacturing plan using more common components among vehicles. It plans to produce half its vehicles by 2020 using the new platform.

Toyota is in a close race with Volkswagen for the top position in the global auto market with group sales of 10.23m cars and trucks in 2014, compared to 10.14m vehicles sold by the German carmaker.

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