Japan's Toyota Motor Corporation will spend about 150 billion yen ($1.3bn) to build two new car plants in Mexico and China, two people familiar with plans said, ending a three-year freeze imposed after unchecked growth lumbered the world's biggest carmaker with too many idle production lines.

It was reported in January that plans were in place for new plants in the two countries, awaiting a green light from top management that has now been given.

President Akio Toyoda had been cautious about expanding after Toyota was hit by a capacity glut following the global financial crisis.

The new plants will raise Toyota's annual production capacity by nearly 300,000 cars, sources said '“ 200,000 in Mexico and up to 100,000 in China.

The renewed expansion drive by Toyota will put more pressure on rivals such as General Motors and Volkswagen AG, in a global automotive industry still burdened by being able to make more cars than it can sell. The increase in global production capacity of up to 300,000 compares with sales of just over 10 million in 2014.

Immediately after the financial crisis, big carmakers were cautious about adding production capacity. Now, with demand in the US back at pre-crisis levels and China's car market growing, albeit more slowly, expansion is back on the agenda.

A Toyota spokeswoman said nothing had been decided.

Toyota is set to build the next-generation Corolla sedan for the North American market starting in 2019, the sources said, confirming a report last month.

It would be Toyota's first passenger car plant in Mexico, where it currently only has a small factory and in China, the world's biggest car market, the new plant will be located in the city of Guangzhou.-Reuters