Exports to Brazil received approval from the Brazilian government in January 1952, and 100 Model FX large trucks were exported for CKD production for the first time. A portion of a Ford Brazil plant (20 meters × 50 meters) was leased for the assembly operations, and production began in June of that year. In addition, an additional 120 large trucks were exported for CKD production in February 1954 and assembly was conducted in the same manner.

Following the sale of the FX trucks, however, service parts were not supplied, and the reputation of Toyota vehicles steadily worsened.1 The Brazilian government banned the import of automobile parts that could be produced locally as a measure to address the shortage of foreign currency, and measures were taken to procure parts locally. There were problems with both the quality and cost when using parts manufactured in Brazil as service parts for Toyota vehicles.

Furthermore, the Brazilian government adopted a policy for the domestication of the automobile industry in June 1956, and CKD exports from Japan were no longer possible. Toyota Motor Co., Ltd. looked into participating in domestic production on its own in order to secure a position in the future Brazilian market and planned to locally produce the Land Cruiser.

Toyota Motor Co., Ltd. requested approval from the Brazilian government for a 'Domestic Production Plan through the Establishment of Toyota do Brasil' on May 10, 1957. The government gave its approval on June 28, and Toyota do Brasil Industria e Comercio Limitada was established as a wholly-owned subsidiary of Toyota Motor Co., Ltd. on January 23, 1958.

Approval was received from the Japanese government to remit funds in July 1958, and parts including engines to assemble 800 vehicles were exported in October. On December 24, a plant was purchased from the local subsidiary of U.K.-based Rover, which had decided to withdraw from the Brazilian market, and production of the Model FJ25L Land Cruiser began in May 1959. This was different from the earlier spot CKD exports and was Toyota's first full-fledged overseas knockdown production. The initial local production rate (by weight) was 60 percent.

A decision was made to expand local production on February 18, 1961 in order to raise the domestic production rate. In accordance with this policy, Toyota do Brasil was reorganized and its capital increased, and construction of a new plant began. Approximately 190,000 square meters in San Bernardo, located in the outskirts of Sao Paulo, was purchased in April of that year for the new plant, and the San Bernardo Plant was completed on November 12, 1962. The plant had monthly production capacity of 250 units and included a number of processes including machining, heat treatment, stamping, painting, and assembly. Frames were manufactured internally, but body stamping and assembly were outsourced to Brasinka.

Most of the machinery and equipment of the new plant were sent from Toyota Motor Co., Ltd. as in-kind contributions. Among the equipment sent was a 700-ton crank press for forming frames that had been installed in the Automotive Department of Toyoda Automatic Loom Works, Ltd. in 1935. Following refurbishment and enhancements, the press was sent to Brasinka. With the completion of the new plant and domestic production of transmissions, the domestic production rate increased to 80 percent.

To further raise the domestic production rate, diesel engines (Model OM-324, 3.4 liter, swirl combustion chamber type) were purchased from Mercedes-Benz do Brasil, Ltda. Supply of engines began in December 1962 and was used on the Land Cruiser in place of the Model F gasoline engine manufactured by Toyota Motor Co., Ltd. At that time, the vehicle name was changed from the FJ25L Land Cruiser to the TB25L Bandeirante (meaning 'pioneers'). Efforts were made to enhance the lineup, and the TB41L hardtop long was introduced in July 1963, followed by the TB51L pickup in August.

Production of the Bandeirante increased steadily from 624 units in 1962 to 1,510 units in 1963, to 2,242 units in 1964, and the 5,000th Bandeirante came off the production line in August 1965.

Domestic production of differential carriers began in February 1968, and a 100 percent domestic production rate was achieved. The Bandeirante was redesigned in September 1969 and the body style was changed from that of the Model FJ25 Land Cruiser to the Model FJ40 Land Cruiser. As a result, the new Model OJ40 Bandeirante was created. In conjunction with the redesign, production of the body was shifted to within the company.