One of the world's largest automakers is increasing its Canadian presence while creating hundreds of jobs.

Toyota Motor Manufacturing Canada Inc. says it is increasing RAV4 production at its Woodstock, Ont. assembly plant.

The company now expects to increase its annual capacity to 200,000 vehicles in the facility by early 2013, an increase from a target of 150,000 in 2012.

The company says the $80 million investment will result in about 400 new jobs.

Currently, the plant has about 2,000 workers.

Most of the vehicles made in the plant are shipped to the United States. Sales of the model fell about 7 per cent in the U.S. last year to over 22,000 units, although Toyota said much of this was due to a parts shortage caused by the Japanese earthquake and tsunami.

But sales have begun to spring back recently, or at least in this country. Toyota Canada said sales rose 31 per cent year over year in February with 12,384 more Toyota, Lexus and Scion vehicles sold.

"We are optimistic that the market is coming back and we're grateful for the strong sales of the RAV4 in the North American market, which has created this increase in production and jobs," said TMMC chairman Ray Tanguay said.

Pump pain, automakers gain

Somewhat counterintuitive, the rising cost of gasoline in North America has actually created a flood of new vehicle purchases. In fact, sales of both small and large vehicles are up over the past year because increased fuel-efficiency has made refueling cars of all sizes cheaper. 

The average age of a vehicle in the United States is about 11 years old, and cars manufactured today are estimated to be about 30 per cent more fuel efficient. So even as gas prices rise, it is expected that consumers looking to save on fuel will replace their old-gas guzzlers of whatever size for a new model.

Adam Jonas, an analyst with Morgan Stanley, expects U.S. vehicles sales to hit 14.8 million this year, up 15 per cent from 2011.

Toyota, as one of the best-selling automakers in the U.S., expects to take full advantage of the rising sales, and today's production announcement is part of that strategy.

Beyond the Detroit 'Big Three'

Ontario has seen traditional Detroit Three carmakers — GM, Ford and Chrysler — cut tens of thousands of jobs in the last decade as their parent companies restructured in the United States. But Toyota and Honda have expanded their operations in Ontario, Canada's manufacturing heartland.

The company has already announced plans the first Toyota electric vehicle to be built in North America, the RAV4 EV, would be made in Woodstock beginning this year.

Canada's Minister of Industry Christian Paradis lauded the company, saying the move will help to strengthen Canada's automotive industry.

"Our government welcomes the news of increased production at Toyota's Woodstock plant, and congratulates the company on the success of the RAV 4," he said in a statement.

"Together, Toyota's Canadian plants represent one of the company's largest, most successful manufacturing operations in the world, leading to jobs and growth in those communities and for Canadians."

Toyota began its Canadian operations in 1986 in the southwestern Ontario city of Cambridge.

It currently employs about 6,500 Canadians at two plants in Cambridge and one in Woodstock, where the Toyota Corolla, Toyota Matrix, Toyota RAV4, and the Lexus RX 350 vehicles are manufactured.

With files from The Canadian Press