SUPERIOR TOWNSHIP, Mich. — In 1977, Japanese automaker Toyota Motor Corp. opened its first U.S. facility in the back office of an Ann Arbor auto repair garage. Nine years later, South Korea's Hyundai Motor Co. quietly settled in nearby.

Both companies were upstarts with big plans to expand in the U.S. market. And to do that, they needed to establish research and development operations in Michigan.

"This is really the epicenter of automotive R&D in North America," said Robert Babcock, corporate affairs manager for Hyundai-Kia America Technical Center Inc.

Toyota's U.S. sales have quadrupled since the 1970s, to 2 million vehicles a year, and its Michigan presence has grown accordingly. The Japanese automaker now employs 600 people on a 106-acre campus near downtown Ann Arbor and has purchased 690 acres nearby for another R&D center that will employ 400 people by 2010.

Hyundai's U.S. market share has more than doubled since it opened its first office, and the company will officially open a $117 million, 200,000-square-foot research and development center near Toyota's where it eventually plans to employ 400 people.

Michigan is home to around 80 percent of the automotive R&D performed in the U.S. As the state tries to win even more of that lucrative business, it counts Toyota and Hyundai among its biggest successes.

Gary Krause, director of emerging business sectors for the Michigan Economic Development Corp., said attracting Asian companies to Michigan has been delicate work. Asian companies need U.S. talent to make sure their vehicles will appeal to American buyers, but they haven't wanted to upstage their Big Three rivals based in Michigan, Krause said.

"They are a little bit more sensitive and that's why it's important for the state to be welcoming," Krause said.

Toyota and Hyundai chose Ann Arbor because it's close to the U.S. Environmental Protection Agency's National Vehicle and Fuel Emissions Laboratory, which opened in 1971. The R&D centers have spent much of their energy making sure vehicles designed in Asia meet U.S. environmental and safety standards and appeal to U.S. drivers.

But that's starting to change as U.S.-based engineers get more responsibility within Asian companies. The 2005 Avalon is the first Toyota vehicle engineered from start to finish in Ann Arbor. Hyundai also plans to give more engineering responsibility to its new R&D center, Babcock said.

Asian automakers will continue doing R&D in other states. Michigan could never match the weather at Toyota's test track in Arizona, for example. But Michigan has aggressively courted Japanese and Korean manufacturers to win whatever business it can, and it's also starting discussions with some Chinese automakers.

Asian companies have won state and local tax credits and in one case, Democratic Gov. Jennifer Granholm and the Republican-controlled Legislature approved the sale of state land to Toyota for its R&D complex, even though it bid less than a local developer, Diversified Property Group LLC. The developer sued but eventually lost the case on appeal and is asking the Michigan Supreme Court to intervene.

Some critics say Michigan hurts other businesses when it grants tax credits to a few. They also say companies may never hire as many workers as they promise.