Japan's largest automaker Toyota Motor Corp. said Wednesday it has reached an agreement with China FAW Group Corp. to jointly produce Toyota's Prius hybrid-engine cars in China by the end of 2005.

The move marks the first overseas production of the popular hybrid vehicle, which runs on electricity and gasoline.

Since the technology to make hybrid cars is highly sophisticated and difficult to transfer to China in the short term, Toyota will adopt the knockdown method of locally assembling auto parts imported from Japan, while offering technical aid to FAW.

Toyota, which is lagging behind its US and European rivals in the Chinese market, aims to expand its market share by promoting eco-friendly vehicles under China's new auto policy featuring reduction of fuel consumption, the company said.

Under the agreement, the two companies will also consider the future possibility of an FAW-brand vehicle featuring a hybrid system based on Toyota technology, it said.

Toyota plans to raise its annual sales of the Prius to 300,000 units worldwide in 2005. The sales target is equivalent to about seven times the 43,000 Prius cars sold worldwide last year.

Source: Xinhua