Toyota strikes first-ever hybrid parts sharing deal in China

Toyota said Thursday it plans to develop components for hybrid vehicles with two Chinese automakers, in an unprecedented technology-sharing deal aimed at boosting green car sales in the world's largest vehicle market.

The Japanese giant is already assembling hybrids in China with First Automobile Works and Guangzhou Automobile Group, the third- and sixth-ranked Chinese car manufacturers respectively.

But the plan to share key hybrid technology with an overseas partner marks a first for Toyota and a shift away from Japanese carmakers' traditional reluctance over such deals for fear of losing their competitive edge.

China's pollution problem has stoked big demand for environmentally friendly cars, such as electric and fuel-cell vehicles, while officials have promised stricter emissions standards to deal with the mushrooming public-health problem.

Previously, Toyota would make key components such as batteries and motors in high-cost Japan and then ship them to joint ventures overseas.

But that drove up the price of models such as its Prius hybrid, which has seen sluggish sales in China.

The new arrangement is expected to cut costs and lead to hybrid cars tailored to Chinese consumers, a Toyota spokeswoman said.

Toyota has said the joint venture would look at developing a commercially available car that runs on petrol and electric power in the next two years.

A report in April said Toyota's rival Honda will share its core green-car technologies with a number of Chinese automakers to tap the huge market.

Germany's Volkswagen and US giant General Motors also plan to produce environmentally friendly vehicles in China but have been reluctant to publicly discuss details because of concerns over technology leaks, Japan's leading Nikkei business daily has reported.