Toyota Australia has opened a new engine plant, claiming to be the first Australian automaker to produce both petrol and hybrid engines.

The factory is at the car making site in Altona, west of Melbourne, and will make around 108,000 I4 2.5 litre engines a year for the locally manufactured Camry and its hybrid variant. Engines will also be exported to Thailand and Malaysia where Camrys are assembled.

Toyota Australia president and CEO Max Yasuda said: “We are now one of only four countries in the world to produce the AR four cylinder engine and are the first Australian car manufacturer to produce petrol-electric hybrid engines.”

Yasuda said the unveiling demonstrated the efforts Toyota was taking to transform its operations to ensure local car manufacturing can maintain its presence in a highly competitive marketplace.

“I am a true believer in local car making. We are working to create a new, stronger business that gives us a competitive advantage that is sustainable and profitable for the future. Building a new engine plant in Australia is at the heart of our manufacturing strategy.

“The new engine plant is a significant milestone. It enables us to maintain our workforce and further develop our technologies, skills and products so we can continue building engines and cars in Australia for many years to come.”

Along with support from the Victorian state gvernment, the federal government contributed A$63m to the engine plant from its Green Car Innovation Fund.

“An ongoing partnership between local car makers, the government and suppliers is fundamental for ensuring Australian industry can compete,” Yasuda said.

The engine plant replaces the original factory built in 1978 which was Toyota’s first engine manufacturing plant outside Japan. Toyota had previously sourced some engines from GM Holden to meet local content rules and imported others from Japan.

The new plant starts full production on 14 January building around 450 engines a day.

Toyota, originally represented by separate independent importers for cars and light commercials, began Tiara assembly in Australia in 1963 and follwed that up with the Corolla in ’66. Initially, cars were assembled by contractor Australian Motor Industries (AMI).

Toyota Australia’s first export model was the Corona wagon to New Zealand in the mid-1980s. In August 2012 it reached 1m export sales, making it the first Australian manufacturer to do so. Later this month, Toyota will assemble its three millionth vehicle.