Toyota Motor Corp. and Guangzhou Automobile Group Co. Ltd.’s Chinese joint venture will begin building Toyota’s Yaris/Vitz subcompact in mid-2008.

Guangzhou Toyota Motor Co. Ltd., which has an annual capacity of 200,000 units on two shifts, currently builds the midsize Camry sedan, which began production last May.

Toyota says it will invest ¥5.7 billion ($49 million) in the JV to finance the addition of 80,000-90,000 units annually of the Yaris/Vitz at the plant.

“Market needs in China are diversifying as the ‘motorization’ of the country continues, and, thus, calls for more-fuel-efficient, economical compact vehicles are on the rise,” Toyota says in a statement. “The decision to produce and market the Yaris in China is an effort to meet these customer needs.”

The Guangzhou Toyota JV was formed in September 2004 with a capital investment of RMB1.3 billion ($166 million).

Camry sales in China this year are set to surpass the 50,000-unit mark Toyota established by 5,000 units, says the auto maker, which reportedly has set a target of 150,000 Camry sales in China for 2007.