Toyota Australia said it would spend A$123m on its local manufacturing operations to "build a major facelift vehicle from 2015 and expand its supplier development programme during the next five years".

The federal government has contributed a grant of $23.6m towards the investment with an undisclosed grant contributed by the Victorian state government, the automaker said.

The federal government will also contribute $5m towards Toyota Australia's $15m supplier development programme over five years, allowing the programme to be accelerated and intensified to assist companies that supply parts.

Australia's Daily Telegraph said the project was a new Camry likely to secure the jobs of 2,500 factory workers until 2017, a year after Ford closes its nearby Victorian manufacturing facilities.

The paper said it understood the extra funding was required because the Camry is due to get a significant update midway through its six year life cycle.

Normally, only minor changes are made in the middle of a car’s production life but the Camry has not been selling as well as expected in North America and Toyota has taken the unusual step of approving a complete redesign, the Telegraph said.

The locally-made Camry is selling well in Australia and its primary export market, the Middle East. However, had Toyota Australia not adopted the new look it would have diminished its export potential because it would, in effect, be continuing with an old model.

The paper noted that, of the three local car manufacturers, Toyota Australia receives the least amount of federal funding and yet employs the most factory workers and builds and exports the most cars by a significant margin.

Toyota Australia president and CEO Max Yasuda said in a statement the latest announcement was a critical step in the local unit's transformation.

"Local manufacturing is an integral part of our business and is a key focus of our five year company-wide transformation programme.

"The investment ensures that Toyota Australia continues to build high quality vehicles for our local and overseas customers."

Toyota Australia currently exports approximately 70,000 Camry and Aurion vehicles per year predominantly to the Middle East, with some exports to New Zealand and the South Pacific Islands. The Telegraph noted, however, that the automaker loses an estimated $A2,500 on every car it ships but sales of its imported models are profitable.

Yasuda said the supplier development programme woudl "see a dedicated team of engineers working with local suppliers to assist them to improve productivity, diversify their business operations and improve their global competitiveness". Mr Yasuda said.

"This programme will help strengthen Australia's supplier base through the application and sharing of Toyota Production System principles and best practice manufacturing techniques."