Tianjin FAW Toyota Motor Co., Ltd., Toyota’s flagship joint venture in China, has been planning to build a fourth plant. The construction will be part of Toyota Motor Corp.’s intention in expanding its production capacity to meet the fast growing demand in the country being the world’s second largest auto market.

Unfortunately, Tianjin Automotive Industrial (Group) Co., Ltd., China FAW Group Corporation, and their Japanese partner propose different ideas regarding the new plant’s site.

Though Tianjin Automotive Industrial (Group) holds only a less than 10 percent stake in FAW Toyota, it has insisted that the fourth plant should be constructed in Tianjin, a port city near Beijing. Currently, the group is likely weakening Tianjin FAW Xiali Automobile Co., Ltd. (SZSE: 000927). Since it has gained negative net profit of CNY 15.48 million in the third quarter of 2007 because of the slim growth in mini car business, the group acknowledged the need to seek a momentum from FAW Toyota.

On the other hand, China FAW Group Corporation is hoping to have the new plant built in Changchun, the capital of northeast China’s Jinlin Province. Currently, it is actually where they plan to construct the new plant. In case this initial decision turns to be the final one, FAW Toyota would then highly drive down its cost, considering that they have an engine plant and a completely supporting system in the city.

According to an auto parts supplier, Toyota wanted to build the fourth plant in the Yangtze River Delta. The interest has touched the authorities and auto parts suppliers in the region in the first half of this year. Because of its geographic position, the region was seen to have the advantages in logistics and component procurements.

FAW Toyota currently holds its plan to reach sales goals of 270,000 units for 2007 and over 400,000 units for 2008. As the company seeks sales revenue of CNY 80 billion, they were found significantly struggling to make and sell 500,000 vehicles by 2010.

Last May, the venture has started the operation in its third plant. The plant, as the venture’s biggest one, was designed to hold a production capacity of 200,000 units annually. Both located in Tianjin, the first and second plants are capable of manufacturing 100,000 and 150,000 units respectively. Considering such numbers, FAW Toyota needs expansion of production capacity to meet the increasing sales targets.

As the world’s largest automaker, Toyota basically needs expansion just like other automakers that seek to maximize its capacity in producing BMW grill and other quality products and vehicles to sustain its customers’ needs.