Toyota and FAW Group are discussing plans for an R&D centre in China, Kyodo News reported.
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The two companies would share the cost equally, according to a Chinese newspaper, which added that Toyota and FAW have previously co-operated on hybrid car development.
Toyota currently operates several vehicle assembly joint ventures with FAW. Indeed, the fortunes of the two companies in China have become increasingly aligned over the last few years, as FAW has taken stakes in Toyota partners in Tianjin and Sichuan.
