Toyota Motor Corp. is likely to make 120,000 more cars a year in the Chinese port city of Tianjin as part of a midterm strategy that's gathering pace as China-Japan ties improve, said four company insiders with knowledge of the matter.

The carmaker's plan to boost annual production capacity by about a quarter in the city will lay the foundation to increase sales in China to 2 million vehicles per year, a jump of over 50 percent, the four sources said.

The Tianjin expansion signals Toyota's willingness to start adding significant manufacturing capacity in China with the possibility of one or two new assembly plants in the world's biggest auto market, the sources said. Car imports also could increase, they said.