Toyota Motor Corp. announces it will establish a sales arm in Mexico City beginning in 2004, but denies it will begin manufacturing there anytime soon.

Toyota Motor Sales de Mexico S. de R.L. de C.V., a subsidiary of Toyota Motor Sales U.S.A. Inc., will begin planning for sales, marketing and service operations slated to begin in Mexico City by Jan. 1, 2004, when the North American Free Trade Agreement (NAFTA) evolves into its final form. However, this doesn't necessarily mean Toyota will be sourcing all products from the U.S., says a company spokesman. Toyota will follow its tried-and-true global expansion plan, first establishing a sales presence, then evaluating local manufacturing possibilities.

The automaker says it has yet to decide on its product lineup for Mexico, but acknowledges it is considering the Corolla, Camry, Echo and Europe-made Yaris. Mexico and the European Union also have implemented a free-trade agreement, where import tariffs on vehicles entering Mexico fell to 3.3% from 20% last year and will be eliminated by 2003, before NAFTA becomes fully realized. Small cars and pickup trucks, Toyota's high-volume products, seem the best fit for the Mexican market, Toyota says.

Initial sales targets will be modest, in the thousands rather than tens of thousands, officials say, with the exact entry date depending on the source of supply.