The Japanese giant said it would build a factory in the central Mexican state of Guanajuato to start production of the Corolla sedan in 2019, creating about 2,000 jobs.

The company also cited it was adding another production line to an existing plant in southern China to start from 2017.

Together, the investments would raise its global capacity by 300,000 units annually -- including 200,000 at the Mexican plant -- at a combined cost of about USD 1.4 billion, Toyota urged, adding it would announce later which model would roll off the new Chinese production line.

Earlier reports said the automaker would probably produce fuel-efficient passenger vehicles under a local brand through a joint venture with a Chinese firm.

The vehicles would meet stricter environmental regulations as China, the world's biggest auto market, grapples with a serious air pollution problem.

Toyota mentioned it was shifting Corolla production away from a Canadian plant to the new Mexican facility and to a factory in the US state of Mississippi.

The Japanese carmaker began operating a new Thai plant in 2013, but since then it has halted investment as the global car market has struggled with oversupply and weak demand.