Japanese automaker Toyota Motor Corp. plans to make key parts of its Prius hybrid in China to boost sales, company officials said.
China is currently the world's largest automobile market, a Kyodo News report in Japan Times said Monday.
The report said Toyota recently received approval from China to produce its next Prius model.
Under the new arrangement, Toyota will gradually move production of Prius' key components -- including batteries and motors to China, Toyota officials were quoted as saying.
Analysts said the effort is partly designed to reduce vulnerability of Toyota's business caused by fluctuations in the yen, which has risen sharply against the U.S. dollar and other currencies lately.
Company officials said Toyota is also looking at launching its electric and plug-in hybrid models in China in the future and procure parts for those next-generation vehicles locally to avoid the yen's fluctuations.
Sales of hybrid cars are expected to rise in China as that country seeks to move away from being one of the world's major polluters, the BBC reported.
"Everybody recognizes that China is going to be a very important market for all car manufacturers," Toyota spokesman Paul Nolsco told the BBC. "Given the scale that we hope to achieve in China, it makes more financial sense to make these parts there."