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Toyota, sensing an opening, debates building Lexus cars in China

By Norihiko Shirouzu

BEIJING (Reuters) – Toyota Motor Corp, long opposed to producing its premium Lexus cars in China because of concerns over quality and profitability, is now considering it to ignite growth and narrow sales gaps with its German rivals, four company insiders told Reuters.

The company, which imports Lexus models made in Japan to sell in China, has spent the last two years researching how to produce them locally.

Toyota also talked to its Chinese joint-venture partners – Guangzhou Automobile Group Co and FAW Group – last year about Lexus models. It wasn’t clear whether Toyota approached the Chinese companies about a partnership or vice versa.

Local production would be a major shift for the world’s largest automaker, encouraged by improved China-Japan ties, as well as new Chinese investment rules that might allow foreign automakers to fully own or majority-control China operations.

“We’re torn over this,” said one of the insiders.

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