Company puts its faith in government incentives and access to financing Japanese car giant Toyota Motor is accelerating its expansion in the mainland with the launch of two high-end models, despite falling prices and stagnant sales growth in the passenger car market. Yuan Zhongrong, executive vice-president of Guangzhou Toyota Motor, a newly formed joint venture between the Guangzhou municipal government and Toyota, said he expected to start selling 2.4-litre Camry cars in May 2006. He was speaking at the second China (Guangzhou) International Automobile Exhibition, where Toyota displayed the upscale, mid-sized saloon. According to a Merrill Lynch research report, the car will sell for about 250,000 yuan. Construction of a new plant for Camry production in Nansha, Guangzhou broke ground earlier this month. The facility is expected to reach an annual production capacity of 100,000 units by 2006. Mr Yuan said the plant would source engines from a nearby factory, which also comes under Guangzhou Toyota's authority and will eventually have an annual output capacity of 300,000 units. About 25,000 engines would be produced in Guangzhou next year, all for export to Japan, he added. Mr Yuan is confident that the emerging car financing sector and the implementation of government incentives to encourage car purchase will help lift sales. Zhang Fangyou, chairman of Guangzhou Automobile Group, which makes Accord saloons in conjunction with Honda, said his firm had no plan to cut prices, despite the planned introduction of Toyota's Camry. 'Camry won't be in the market until 2006, although they are positioned in the same grade as Accord, Camry and Accord each have their own uniqueness,' he said. He believes the mainland car market will see a gradual recovery in the first half of next year and, while producers desperate to lower inventory might still be tempted to slash prices, he said most companies would act rationally. Also at the car exhibition, Wang Fachang, deputy president of FAW Toyota Motor - a joint venture in northeast China between state-owned First Auto Works and Toyota - said the company would launch Toyota's luxury Crown model in March next year. He said the car would be produced in Tianjin, adding that he projected sales to reach 20,000 units next year. He declined to comment on price but the Merrill Lynch report cited sources who expected the car to cost 400,000 to 450,000 yuan. The brokerage forecast luxury car prices in the mainland to fall by 15 per cent next year as more products are launched and as import quotas will be removed in January. Mid-range cars are projected to see a 9 to 10 per cent decline in prices while low-end cars will see a 7 per cent fall. 'The car market will certainly be more competitive next year,' said Beijing Hyundai Motor sales division president Steve Yang. 'We believe the rebates and price cutting will continue.' But he said his company was '99.9 per cent confident' that it could reach its 150,000-car sales target set for this year. It indicated earlier that it planned to expand annual output capacity to 600,000 units by 2007. Beijing Hyundai, a joint venture between Beijing Automotive Investment and South Korea's Hyundai, was also setting up a car finance operation, Mr Yang added.