Why is it expanding production?

Toyota isn't different from Honda and Nissan in thinking that what it calls the "high pound/low euro problem" makes life hard.

All three Japanese firms in the UK are making a loss at their factories (Honda in Swindon in the south, Nissan in north east England and Toyota in the English midlands and in Wales).

Toyota's view is that they have to make the best of difficult conditions and the best way of doing that is by utilising their factories to their fullest extent.

Its big car plant in Derby, which is supplied by a smaller engine plant in Wales, is one of the most efficient in the world so it wants to make the most use of its investment.

So the euro has absolutely nothing to do with the decision?

Car makers never tire of saying how they don't make big decisions on the basis of short-term movements in exchange rates.

Having said that, Toyota's decision doesn't mean substantial new building or buying lots of expensive machinery - just using existing factory to its full capacity - and just as the company can increase production if there's spare capacity, so it would be just as easy to cut it back.

There may also be a feeling that the weakness of the euro is a temporary matter, and as the eurozone economy continues to grow so will its currency strengthen.

Will it mean more jobs?

Toyota employs about 300 people in North Wales and about 2,700 people in Derby.

Another 50 will be taken on in the smaller plant and another 250 in the bigger one. What the decision does, though, is give the plants a vote of confidence, so making the existing jobs seem more secure.

Is Toyota alone in having difficulties?

Absolutely not.

Honda has recently decided not to make a new car in Britain for export to Continental Europe.

Instead, it will try to sell to the American market. The current exchange rates make that look possible but any changes might close off America as well - in which case Honda has deeper problems.

Nissan in Sunderland may or may not get a new model to make - the company is currently debating whether to make it in a Renault factory in France (Renault has a 37% stake in Nissan).

Ford is ending car making at Dagenham. Vauxhall is closing its plant in Luton. BMW sold Rover partly because of the unfavourable exchange rate.

All of these companies like the UK as a place to do business.

There's less regulation than in Continental countries.

Wages are attractive and employees are flexible. What they don't like is the exchange rate.