Toyota Motor will manufacture the Prius hybrid and its key parts in China in a bid to boost sales in the world's largest car market, a company spokeswoman said Sunday.
This will mark the first time the Japanese automaker has produced key components such as motors and batteries for the petrol-electric hybrid in a facility outside Japan.
Toyota manufactured the second model of the Prius in China, with key components exported from Japan, but stopped the operation in 2009.
"The company has a business policy to expand sales of environmentally friendly cars in China," said Toyota spokeswoman Shiori Hashimoto, adding production of the car in the country had been approved by Chinese authorities.
The Nikkei business daily reported that production of the third Prius model is set to begin in China at 2012 at the earliest.
The Nikkei said that it will be a joint venture with China FAW Group Corp, a major Chinese automaker.
The car's major components will be produced at the company's research and development facility in Changshu, in eastern China, but the Toyota spokeswoman would not say where in China the car would be assembled.
Toyota would also not disclose which parts would be made in China.
Volkswagen and General Motors plan to produce environmentally friendly vehicles in China, but are reluctant to talk about local production of key parts due to concerns over technology leaks, the Nikkei said.