Partial Production Halt for Toyota in China

Amidst the tides of change in the Chinese automobile market, Toyota Motor Corp. is making significant production adjustments at its assembly plant in Tianjin, China. This move comes in the wake of declining sales of gasoline-powered vehicles, which have traditionally been the company’s primary products. The shift is attributed to the rapid rise of electric vehicles in the Chinese market.

Tianjin FAW Toyota Engine Co., a joint venture involving Toyota Motor Corp., China’s state-owned China FAW Group Corp., and other stakeholders, runs the plant. As a response to the changing market dynamics, the production of the Vios compact sedan ceased earlier this year, while output of the popular Corolla sedan has been scaled back at the plant.

The growing popularity of electric vehicles in China is fueled by government support, including subsidies, leading to a surge in market share for Chinese automakers specializing in electric vehicles. Japanese automakers, with a stronghold in gasoline-powered vehicles, are facing challenges in this evolving landscape.

Despite an overall 9.1% increase in new vehicle sales in China in the January-October period, reaching 23,967,000 units, driven mainly by strong electric vehicle sales, Toyota experienced a 3.6% decline in sales, totaling 1,557,600 units during the same period. This has led the company to cut approximately 1,000 temporary jobs this year at GAC Toyota Motor Co., another joint venture in the region.

The struggle is not unique to Toyota, as other Japanese automakers are also grappling with declining sales in China. Sales for Honda Motor Co. and Nissan Motor Co. experienced significant drops of 16.7% and 25.1%, respectively. Mitsubishi Motors Corp. went one step further and announced its decision to withdraw from auto production in China in October.

An official at a Japan-affiliated automaker in Beijing remarked on the challenges faced by non-Chinese automakers in the Chinese market, noting that Toyota is faring relatively better compared to its foreign counterparts, including those from Europe and the United States.

However, it is clear that the landscape is changing rapidly, and foreign automakers, particularly those reliant on gasoline-powered vehicles, are facing an uphill battle in maintaining their market presence in China in the midst of the electric vehicle revolution. For Toyota and its peers, adapting to this paradigm shift will be crucial for their long-term success in the world’s largest automobile market.

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