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Toyota president Katsuaki Watanabe said Australia had joined Japan and the United States as part of Toyota's hybrid family. Mr Watanabe conceded the hybrid Camry would be more expensive than the regular model, but suggested the $35 million subsidy might be used to keep the retail price down. "It was only recently that we heard about the amount so we are not sure how we will use it," he said.

Mr Rudd said it was an important moment for the Australian car industry. "We are delighted Toyota has decided to invest in the Australian car industry and build the hybrid Camry at Altona," he said.

Toyota plans to build 10,000 of the cars a year at the plant. The cars use a third less petrol than a standard Camry, saving the average motorist about $1000 a year at today's prices. The $35 million comes from the $500 million green car innovation fund that Mr Rudd promised before the election.

Mr Rudd rejected suggestions it was a manufactuiring subsidy. He said it was to help with start-up costs for a product that had economic and environmental benefits. AAP reports: Toyota's plan to build a hybrid car in Australia will result in other companies racing to embrace green technology and new export opportunities, industry insiders say.

The Australian Manufacturing Workers' Union (AMWU) said the deal was good news for Australia's export future. "Any announcement regarding the production of green cars is a good announcement," AMWU national secretary Dave Oliver told ABC Radio. "We've been saying for some time we need a plan for this industry as we start to consider the type of vehicles people will be driving in the next 10 to 20 years.

"Not only for the domestic market but to position itself for export strategies." Car industry experts say today's expected announcement would lead to an explosion of green car technology locally.

"The kind of response it's going to trigger from other manufacturers is to look at their own products and how they can be made more environmentally friendly," Monash University manufacturing specialist Richard Cooney told ABC Radio. "If this gives Toyota a leg-up in terms of the fleet market for vehicles then other automotive manufacturers are going to have to look at what Toyota is doing and find a business strategy to match that." Having a hybrid car built in Australia would give local designers, engineers and manufacturers access to the latest green vehicle technology, Dr Cooney said.

"It keeps Australia in the loop." Mr Rudd yesterday said he wanted to see an Australian manufactured hybrid car "as soon as possible".



Brumby welcomes hybrid car production



Victorian Premier John Brumby said the decision would secure jobs for the state's car workers.



Mr Brumby said 10,000 hybrid Camrys would be made at Altona each year from the start of 2010, taking the plant's total production of cars above 150,000 annually.



"With car manufacturers moving on a global scale to produce green, fuel-efficient cars, it is crucial that the Victorian auto industry secures a slice of this investment, which will add $150 million annually to our economy," Mr Brumby said.

Camry too heavy: Democrats



Australian Democrats leader Lyn Allison welcomed Toyota's plan to build hybrid Camrys at Altona but said a smaller model should have been chosen. The Victorian senator said the Camry weighed an inefficient 1450 kilograms. "We are still addicted to heavy cars," Senator Allison said in a statement.

"Lower vehicle mass is essential for maximum efficiency." Holden should now follow Toyota's green lead, she said.

"CSIRO and GMH prototyped the hybrid ECommodore in 2003, so the research and development is done and, with a rejig, it's ready to go."



Hybrid cars 'won't fix reliance on fossil fuels'



A transport group has welcomed the news, but says it will not fix the nation's reliance on fossil fuels.



Tourism and Transport Forum national transport manager Stewart Prins said hybrid cars were a bridging technology between gas guzzlers and the next generation of zero-emission cars.



"Models such as the hybrid Camry will undoubtedly play a useful role in the transition from the old technology to the new, and their development is welcome. But they are not the long-term answer to the twin challenges of soaring petrol prices and greenhouse gas emissions," Mr Prins said.



He is calling on the Federal Government to produce a national strategy that would guide the country towards a post-carbon economy.



He said the strategy would include reducing tariffs on imported low-emission vehicles and building a carbon-neutral public transport network.



Meanwhile, Environment Victoria said the move was a much needed reform for Australia's car manufacturing industry.



Campaigns director Mark Wakeham said that for too long Australia's car industry had focused on building petrol-guzzling six-cylinder cars.



"Now, we can participate in the booming market for hybrid cars globally," he said.



But, he said, manufacturing hybrid cars was only one part of the puzzle to help reduce transport emissions.



"We also need vehicle efficiency standards for the whole vehicle fleet across Australia.



"The challenge is to green our whole vehicle fleet rather than just one part of the market. We also need to reduce our car use and this will require state and federal governments to provide serious investment in new public transport infrastructure."

