Toyota aims to build at least 2.5 million vehicles a year in China by 2030, three sources said, in a strategy that will see the company bring its production and sales operations closer together in China and allow local executives more freedom of action. in product development.
The plan represents a strategic pivot by the world’s largest automaker into the largest car market on the planet, highlighting Toyota’s ambition to recover business lost to China’s BYD and other local brands in recent years.
Toyota’s strategy contrasts with that of other global automakers, including Japanese ones, which are reducing presence or exiting China.
The Japanese automaker aims to increase production to up to 3 million vehicles a year by the end of the decade, two of the sources said. However, the company stopped short of setting a formal goal, the three sources said.
The higher number represents a 63% increase over the record 1.84 million Toyota vehicles produced in China in 2022. Last year, the company produced 1.75 million vehicles in the country.
Toyota has informed some suppliers of the intended increase, hoping to reassure parts makers about its commitment to China and thus secure its supply chain, the sources said.
The Japanese automaker aims to bring sales and production operations closer to its two Chinese joint ventures to increase efficiency, two of the sources said.
The company also intends to transfer as much of the development responsibility as possible to the China-based team, which has a better understanding of local market preferences, especially regarding electrified and connected car technology, two of the sources said.
“Too late”
The moves signal a growing awareness within Toyota that it needs to rely more on local staff to take charge and accelerate product development in China, one of the sources said, adding that otherwise “it will be too late.”
Traditional automakers, including Toyota, have been overtaken in China as domestic electric vehicle makers are rapidly launching affordable, battery-powered and technology-enhanced cars.
Last year, Toyota announced plans to deepen cooperation between its R&D center in Jiangsu province and its two local joint ventures.
One problem, which represents the reasons for Toyota’s change in strategy, is that vehicles developed independently by joint venture partners are selling better than those produced with Toyota.
For example, FAW Group’s Hongqi brand and GAC Group’s Aion electric vehicle outsell the respective models from FAW Toyota Motor and GAC Toyota Motor. Toyota now aims to better incorporate the know-how of local partners into its cars.
Currently, the same vehicle is produced in each of the two joint ventures and sold under a different design and company name — so-called “twin vehicles.” Going forward, production of each car will be consolidated into one of the joint ventures, two of the sources said.
Amid competition, Mitsubishi Motors Corp has withdrawn from China, while Honda and Nissan have decided to reduce local production capacity.
