Russia enjoyed solid economic growth following the 1998 currency crisis, and sales of Toyota vehicles grew thanks to the reinforcement of sales networks and other measures, reaching the same levels as the five leading Western European countries. However, the Russian government, looking ahead to future membership in the World Trade Organization (WTO), seemed likely to raise import duties on completely built cars and lower duties on parts with the aim of protecting and nurturing the domestic automobile industry. In line with its policy of producing vehicles where the demand exists, TMC began looking into local production in Russia.

When selecting a plant site, TMC made a comprehensive determination taking into consideration a variety of factors (including logistic convenience, good access to markets, plentiful labor force, and how positive governments were in their solicitations) and selected St. Petersburg. The Camry was selected as the production vehicle based on competitive conditions, profitability, and other factors. Limited Liability Company Toyota Motor Manufacturing Russia (TMMR) was established in 2005 and began local production of the Camry in December 2007 with an annual production capacity of 50,000 vehicles.

In order to respond to the growing demand for hybrid vehicles driven by the Prius, TMUK began producing the Auris Hybrid, the first Toyota hybrid to be made in Europe, in 2010. That same year, TMMF announced that it would begin producing a compact hybrid vehicle in 2012.

As the European market grew in conjunction with the end of the Cold War and the geographic expansion of the EU, TMC steadily increased production sites and production models in Europe.