NANSHA, China – Toyota Motor Corp. (TM) on Tuesday rolled out its first made-in-China Camry from a new factory that the Japanese automaker hopes will help it to catch up with rivals in the world's fastest-growing car market.
Hundreds of Japanese and Chinese dignitaries were on hand for an elaborate ceremony as the Camry, the best-selling car in the United States and a top import in China, rolled off a line at Toyota's 3.8 billion yuan ($475 million) plant in Nansha, north of Hong Kong.
The company says the spic-and-span facility brings its most advanced technology to China — a step sought by Chinese leaders as they try to build up a world-class auto industry.
"There is no question but that the Chinese market will overtake the Japanese market," said Yoshimi Inaba, Toyota's former chief for America, who was appointed last year to head the company's push into China.
Toyota joins a rush by the world's automakers for a share of China's auto market, which saw sales jump by 30 percent last year to 5.7 million vehicles, third largest in the world behind Japan's 5.8 million.
In a bid to pump up sales, Toyota said Chinese-made Camrys will be priced at 197,800-269,800 yuan ($24,700-$33,700), well below analysts' expectations. Imported Camrys last year sold for 340,000 yuan ($42,500).
"You see the price, it's very clear that we face heavy pressure in this market," said Zhang Fangyou, chairman of Toyota's local partner, Guangzhou Automobile Group.
Toyota, a relative latecomer to China, had a paltry 3.5 percent of the market last year, with 183,150 vehicles, according to the company's latest statistics.
That puts it well behind top foreign automaker General Motors Corp. (GM), which vaulted past Volkswagen AG of Germany to grab 11 percent of the market last year with 665,390 units sold.
Despite political tension between Japan and China that flared into riots last year, Japanese automakers are heavily investing in China, and last year pumped a total of 113.7 billion yen ($1.03 billion) into the country.
Much of that spending has gone to the area around the southern city of Guangzhou, near Hong Kong, which has become an automaking hub.
Japan's No. 3 automaker, Honda Motor Co., began making Accords in Guangzhou in 1999 and launched exports of its Jazz compact model from there to Europe last year. No. 2 Nissan Motor Co.'s joint venture in eastern Guangzhou with Dongfeng Motors has been ramping up production of the Tiida.
Toyota began exporting to China in 1964 but lagged behind rivals in the country, choosing instead to concentrate on the markets in the United States and Europe. It wasn't until 2002 that it rolled out its first locally produced, Toyota-brand car with a Chinese partner, state-owned FAW Group Corp.
Chinese and Japanese officials are keen to highlight progress in business ties between the two Asian giants amid disputes over territory and over Japanese Prime Minister Junichiro Koizumi's visits to a war shrine that honors the dead of World War II, including war criminals.
Such political tension doesn't seem to affect most Chinese consumers, who link Toyota with quality, reliability and fuel-efficiency.
"There are already a lot of loyal customers," said Yale Zhang, an analyst at CSM Asia Corp. "Everybody is waiting for this car."
Toyota says it has spent 215 billion yen ($1.9 billion) in China since 1998 and now has a dozen plants making parts and assembling vehicles.
"This factory has the world's most advanced technology, the newest equipment," says Katsuhiro Shinzato, a Toyota employee, as he led a tour through the factory's highly automated lines ahead of the Camry launch.
Local workers spent between three and six months in training. The daily routine calls for 30-minute meetings twice a day, at the beginning and end of shifts, to thrash out any problems.
The production line is built at eye level to encourage eye contact as well, Shinzato said.
"Communication is extremely important," he said.
Although the factory has 263 of the latest robots, its level of automation is only 54 percent, he said, well below the 80 percent to 90 percent found at factories in Japan and the West. That's typical of most foreign auto plants in China, where labor costs a fraction of Western rates.
Despite wages of about $2 an hour, foreign automakers face relatively high costs in China, mainly due to their need to import steel and components from abroad.
But that is changing as productivity improves and auto parts makers shift factories to China.
Toyota's joint venture with Guangzhou Automobile, a state company that was founded as a machining factory before the 1949 communist revolution, is due to have a capacity of 100,000 Camry sedans a year and to add the Vitz subcompact by 2008.
Before the company stopped exporting Camry's to China in mid-2005, the car was the top-selling import model for years. Sales dropped last year to 9,000 from about 23,000 the year before.
The new Nansha factory also has drawn a group of parts suppliers such as Japan's Denso Corp., which said Tuesday it will spend 30 billion yen ($265 million) over the next five years to shift production to China.
With its partner FAW, Toyota made 240,000 autos in four locations in 2005. It plans to bring another factory online in Tianjin in 2007, and to bring its market share up to 10 percent by 2010.