Toyota Motor announced plans to spend CAD1.4bn (US$1.1bn) at two existing factories in Canada to support production of upcoming models.
The Canadian government confirmed it would provide incentives worth $110m to support development of the Cambridge and Woodstock plants in the province of Ontario.
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Toyota had already announced plans to shift Corolla production from Cambridge to US factories, allowing the Canadian plant to focus on higher value models such as the RAV4 compact SUV for North America.
Woodstock would become the automaker's main North American production hub for hybrid vehicles.
Last month Toyota said it planned to shift production of its redesigned Corolla model from Canada to two plants in the US – in Blue Springs, Mississippi and to a new joint venture facility the company is building with Mazda in Huntsville, Alabama. Production at Blue Springs is scheduled to start in early 2019 with Huntsville following in 2021.
The company's new Mexican plant in Guanajuato, originally designated to produce Corolla, will instead make pickup trucks for sale in North America.
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