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Japanese car-maker Toyota will soon establish an engine-production facility here.

An official from the Automobile Office under Guangzhou City Government revealed this yesterday.

The facility will be able to produce more than 500,000 car engines annually, the official said.

And most of the engines will be sold to Southeast Asia when it starts production in the following years.

But the official refused to give more details, saying that negotiations for the project have reached the final stage.

Lin Shusen, Party secretary of Guangzhou, has also confirmed that the Toyota project would surely settle in Guangzhou within the year.

Lin said his city would try to boost its automobile-part industry as Guangzhou's whole car production has geared up to the large scale.

Early this year, Guangzhou Automobile Office signed a letter of intent with Toyota to jointly set up a whole car production facility in the city's Nansha Development Zone, which is situated at the mouth of the Pearl River.

The whole car production facility is expected to be a joint venture between the Toyota and Guangzhou Automobile Group.

The joint venture will produce both economy and luxury sedan cars.

The official said the project would soon be approved by the central authorities.

The Toyota project will become the third Japanese whole car production facility in Guangzhou. The city has attracted another two big name Japanese car producers - Honda and Nissan.

Toyota's Guangzhou production facility is expected to help the carmaker reach its goal of grabbing 10 per cent of China's automobile market.

Toyota is expected to produce and sell between 300,000 and 400,000 cars in China annually in the wake of 2010.

But Toyota will meet fierce competition from other Japanese carmakers in the southern Chinese region.

Guangzhou Honda Automobile, a 50-50 joint venture between Guangzhou Automobile Group and Honda Company, is expected to produce more than 70,000 cars this year and will reach a production capacity of more than 200,000 next year.

Guangzhou Nissan is another 50-50 operation between the State-run Dongfeng Motor and Japan's Nissan Motor. The first sedan car of the 16.7-billion-yuan (US$2 billion) joint venture rolled off the assembly line in June.

The Nissan production facility is designed to reach an annual capacity of more than 200,000 cars within three to five years.

And Honda also has a production facility which is now under construction in Guang-zhou.

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