Receive free Toyota Motor Corp updates
We’ll send you a myFT Daily Digest email rounding up the latest Toyota Motor Corp news every morning.
Toyota Motor is running out of road in China, formerly one of its strongest markets. It has cut the jobs of about 1,000 factory workers in the country before the end of their contracts.
Toyota was once one of China’s favourite foreign car brands. But deliveries slipped for the first time in a decade last year to 1.9mn, despite total market growth of 9.5 per cent. That came as a nasty shock: bulls had brushed off declining sales as easily reversible once the Japanese automaker launched its own electric car models in China.
Instead, Toyota may have missed its moment. Toyota sales in China fell 9 per cent in the first half. Peers Honda and Nissan have also posted weak sales in China lately. Mitsubishi Motors suspended its China operations this month. Shares of Guangzhou Automobile Group, also the local joint venture partner for Mitsubishi Motors, have fallen 38 per cent over the past year.
China has made an extraordinarily rapid shift to electric cars. Toyota has been slow to adjust. Tesla and BYD, thanks to their broad, modern electric car line-ups, have been breaking sales records this year in China.
Shares of Toyota are up 30 per cent this year and trade at 10 times forward earnings. Investors believe the company, held back by an unhappy foray into hydrogen vehicles, is serious about going fully electric.
The renewed popularity of hybrids in China shows that electric models are not the only problem there. There was an unexpected, almost 90 per cent increase in plug-in hybrid car sales in China in the first quarter. Sales have remained strong throughout the second quarter, accounting for almost half of all “new energy cars” sold in June.
That should have boosted Toyota’s sales. Hybrids account for roughly a quarter of its total sales in China. Yet BYD now dominates the hybrid market.
Japanese cars have long been popular in China. They claim a fifth of the world’s largest car market. Buyer loyalty was so strong that Japanese manufacturers rallied sales following widespread anti-Japanese sentiment over a 2012 territorial dispute.
But Japanese EVs and hybrids are becoming a turn-off for Chinese consumers. Toyota has pledged to accelerate the development of EVs tailored to the Chinese market. The slower its progress, the harder it will be for the carmaker to revisit its Chinese glory days.
If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button ‘Add to myFT’, which appears at the top of this page above the headline
