Toyota Motor Corporation and China’s Guangzhou Automobile Group Co. in principle agreed to joint production of cars in China, the daily Yomiuri Shimbun reported on its website on Thursday, Dow Jones Newswires said.

According to the news agency, Toyota will formalise the venture at the meeting of its vice presidents as early as next week – it has already applied for approval of the joint venture from the Chinese government and expects to finalise the contract by the end of this year.

Dow Jones said the two companies plan to build a factory in the suburbs of Guangzhou City and begin manufacturing mid-size passenger cars in 2005 at a rate of around 30,000 vehicles a year.

The news agency noted that Toyota is already in a business partnership with FAW Group Corp. for joint-production, the venture targeted at customers in China’s northern regions. Toyota hopes to make the business tie-up with Guangzhou a springboard for winning customers in fast-growing southern China, the report added.