By Maki Shiraki
TOKYO (Reuters) – Toyota is planning to increase its vehicle production in China to at least 2.5 million units per year by 2030, according to sources familiar with the matter. This strategic shift aims to bring Toyota’s Chinese sales and production operations closer together, allowing local executives more autonomy in development.
This initiative, not previously disclosed, signifies a significant move by the world’s leading automaker in the largest car market globally. It underscores Toyota’s determination to reclaim market share lost to local competitors like BYD in recent years.
Unlike other global automakers, including some Japanese firms, that are scaling back or exiting China, Toyota intends to ramp up production to potentially 3 million vehicles annually by the end of the decade. However, the company has not set a formal target for this expansion, the sources noted on condition of anonymity.
This production goal represents a 63% increase from the record 1.84 million vehicles Toyota manufactured in China in 2022. In response to this plan, Toyota has informed its suppliers to reassure them of its long-term commitment to the Chinese market and secure its supply chain.
When asked for comments, Toyota stated, “With the intense competition in the Chinese market, we are constantly considering various initiatives.” The company emphasized its dedication to delivering high-quality vehicles tailored for the Chinese market.
To enhance operational efficiency, Toyota aims to consolidate the sales and production functions of its two Chinese joint ventures. Additionally, the company plans to delegate more development responsibilities to local staff who possess a deeper understanding of Chinese consumer preferences, particularly in electrified and connected car technologies.
Recognizing the need for a more localized approach in China, Toyota is taking steps to expedite product development and leverage the expertise of its local partners. The company aims to streamline its production processes by consolidating the manufacturing of each vehicle model at one joint venture, instead of producing “twinned vehicles” at both ventures.
As Japanese automakers face challenges in China, Japanese parts suppliers with operations in the country are also feeling the impact. Toyota reported a decline in operating income in China during the first half of the financial year, primarily due to heightened marketing expenses amid intense competition from Chinese brands.
While Mitsubishi Motors Corp has exited the Chinese market, Honda Motor and Nissan Motor have opted to reduce their local production capacities in response to the competitive landscape.
