Automaker Toyota plans to build at least 2.5 million vehicles a year in China by 2030, three sources said, in a shift in focus that will bring the company’s production and sales in the country closer together and give local executives more freedom in developing new products. products.
The plan, which has never been previously disclosed, represents a change in strategy at the world’s largest vehicle manufacturer, highlighting the company’s ambitions to regain market share taken over by BYD and other Chinese companies in recent years. Toyota’s strategy conflicts with that planned by other automakers – including Japanese -, which are reducing or closing their operations in China.
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The company plans to increase its production to up to 3 million vehicles a year by the end of the decade, two sources said. There is, however, no formal goal established, said three people close to the topic. All asked not to be identified, because the matter has not yet been made public.
The number of 3 million cars would represent a 63% increase in the automaker’s record production of 1.84 million vehicles in China in 2022. In 2023, 1.75 million units were manufactured.
Toyota has revealed its intentions to some suppliers, hoping to reassure parts makers of its commitment to China and secure its supply chain, the sources said.
In response to questions from Reuters, Toyota said in a statement: “With the intense competition in the Chinese market, we are always evaluating various initiatives.” The company said it will continue working to make “always better cars” for the Chinese market.
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The company intends to transfer what it can in product development to its employees in China, who know local preferences better, especially regarding electrified and connected vehicle technologies, two of the sources said.
The measures show Toyota’s acceptance that it needs to use more of its Chinese workforce to accelerate product development in the country, one of the sources said. Otherwise, “it will be too late”.
Traditional automakers — a group of which Toyota is part — were challenged in China, with local companies developing affordable, battery-powered vehicles with advanced technology.
Last year, Toyota announced plans to increase cooperation with its research and development center in Jiangsu province and its two local joint ventures. One problem is that cars developed independently by partners are selling better than those produced by the Japanese company itself.
Toyota announced on Wednesday that its operating profit in China fell in the first half of the fiscal year, mainly due to higher marketing costs caused by heavy competition at cheap prices from local brands.
Amid this competitive scenario, Mitsubishi Motors Corp left China, while Honda Motor and Nissan Motor decided to reduce local production capacity.
