Toyota and PSA Peugeot Citroen on Monday launched commercial production at their joint venture plant in the Czech Republic, project spokesman Matej Matolin told Agence France Presse (AFP).

Four years after the car makers unveiled their joint venture and three years after they chose a site near the Czech town of Kolin, the first three cars rolled off the production line - one of each of the new Toyota, Peugeot and Citroen models, AFP said.

The plant, called TPCA (Toyota Peugeot Citroen Automotive) and said to be the most efficient in the world, will be able eventually to produce 300,000 cars a year - 200,000 for the Peugeot and Citroen brands and 100,000 for Toyota.

The factory should roll out a car a minute when production reaches full speed, AFP said.

At around €1.3 billion ($US1.69 billion), the plant located 40 miles east of Prague is the biggest foreign investment in central Europe to date, Czech investment agency CzechInvest told AFP.

"We expect to reach full capacity within one year of the launch of commercial production. Compared to other car plants, ramping up production in one year is a very aggressive and challenging task," the head of the operation Masatake Enomoto reportedly said during a press conference at the plant this month.

"I can imagine that the first cars will be on sale across Europe in May," he added.

AFP noted that the cars are destined for western European markets but their price has not yet been announced.

Enomoto told Agence France-Presse that the two companies had managed to save €200 to €300 million on the original €1.5 billion planned cost owing to a favourable euro-yen exchange rate since the investment was announced in 2001 and significant cost reductions.

"The final value of the investment will be announced by the two parent companies in about one month but the savings have been significant," he reportedly said.

TPCA vice president Jean Pierre Chantossel told AFP the plant would produce 1,100 cars a day once it reaches full production capacity.

"This will be one of the most efficient car plants in the world. A car will roll out of the plant each 60 seconds" he told AFP. This was 20 to 30 seconds faster than in PSA French plants, owing to the latest technology. "After 2006 we hope to even reach a production level of 320,000 cars annually," he added.

"Eighty percent of all parts in terms of volume and value will be sourced in the Czech Republic, which was surprising for us," Chantossel told AFP, adding that 70% of the vehicles would be distributed by rail and the rest by road.

Enomoto and Chantossel reportedly said that the outsourcing of parts and being close to clients were more important than comparatively low pay for workers in the choice of location. "The big advantage of the site over Germany, France or Britain is logistics," Enomoto said. "We were not interested in building a car plant here for lower salaries alone. It is important to be close to clients in Europe which is why we chose central Europe. It is a big advantage that we are sourcing so many parts locally," he added.

Enomoto told AFP 40 Japanese companies had located to the Czech Republic since the investment was announced. Most of these were linked to the TPCA factory.

The first production vehicles are to be presented at a press event prior to the Geneva motor show on Monday night.

AFP said TPCA currently employs almost 1,800 people and by September 2005 that number should double to 3,000.

Workers are to work shifts of almost 10 hours a day, four days a week, and the factory is to operate six days a week, Agence France-Presse added.