CAMBRIDGE, ONT. -- The first Lexus model to be built outside Japan rolled off the assembly line at Toyota Motor Manufacturing Canada Inc. in Cambridge, Ont., yesterday, as Toyota Motor Corp. and other offshore-based auto makers ratchet up the competitive pressure in North America.

The Toyota factory in the southwestern Ontario city will pump out 60,000 RX330 sport utility vehicles annually for Toyota's luxury division once full production is reached.

The new production at Toyota Motor Canada, combined with new capacity coming on stream from Japan-based rivals Honda Motor Co. Ltd., and Nissan Motor Co. Ltd. from plants in Alabama and Mississippi plus output from other Asia and Europe-based companies, is part of a key trend that is reshaping the North American auto market.

That trend is the gain in market share by the offshore-based producers at the expense of the traditional U.S.-based giants, Ford Motor Co., General Motors Corp. and the Chrysler division of DaimlerChrysler AG.

In the case of Toyota, production of the new Lexus begins even as the auto maker starts construction on a new assembly plant in San Antonio, Tex., to build pickup trucks and scouts North America for locations for a seventh factory as part of its plan to capture 15 per cent of the world vehicle market by 2010.

"Toyota has a policy to produce vehicles where we sell them," Hiroshi Kawakami, a managing officer of Toyota Motor Corp., told reporters yesterday before the first Canadian-built RX330 rolled off the line.

The new vehicle comes after a $650-million investment boosts production at the Cambridge plant to 250,000 vehicles a year and employment to about 4,000 people. The RX330 will sell for between $49,900 and $62,500 in Canada.

"The objective is to create more jobs," added Ray Tanguay, president of Toyota Motor Canada, who noted that several new parts makers have opened factories in Canada to supply the Lexus vehicle and created hundreds of extra jobs.

The RX330 is the best-selling vehicle in the Lexus fleet and accounts for about 40 per cent of overall sales in the U.S. market, which reached a record 234,000 last year. "It has made Lexus the best-selling luxury brand in the United States," said Dennis Clements, general manager of Lexus sales for Toyota Motor Sales USA Inc.

Lexus sold 10,000 of the vehicles in August in the U.S. market, which will be the destination for more than 80 per cent of the vehicles turned out in Cambridge. The availability in the U.S. market has dwindled to just five days' supply, Mr. Clements said, compared with an industry goal of a 60-day supply of any particular vehicle.

The RX330 illustrates another tactic being employed by Toyota, Honda and other offshore-based manufacturers -- they're targeting the truck market, the last bastion of profitability and market domination by their U.S.-based rivals.

As Cambridge rolls out this Lexus, Nissan gets set to launch a full-sized SUV called the Pathfinder Armada next week out of its new plant in Canton, Miss. That plant is already cranking out full-sized pickup trucks and redesigned versions of the Quest minivan, both of which are aimed at markets long dominated by Chrysler, Ford and GM.

Honda is doubling the size of its Alabama factory so it can turn out 300,000 Odyssey minivans and Pilot SUVs a year.

As those auto makers increase production and open new plants, Chrysler, Ford and GM are trimming production capacity.

Offshore-based companies will add 1.6 million units of new vehicle production capacity by 2006, Banc of America Securities Inc. analyst Ron Tadross noted yesterday, while Chrysler, Ford and GM trim output by 1.1 million vehicles.

"We do not anticipate the Big Three to arrest their 1.5 to 2 [percentage] point annual share loss," Mr. Tadross said in a report to clients.