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Toyota Plans to Triple its Vehicle Output in China By 2030

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【Summary】Japan’s Toyota Motor Corp has announced it intends to triple its vehicle offerings in China by 2030. The automaker is planning to to ramp up production in China to 3.5 million vehicles annually by then, in a renewed push to make up lost ground in the world’s biggest auto market.

Eric Walz    Aug 28, 2018 4:54 PM PT
Toyota Plans to Triple its Vehicle Output in China By 2030

China is the world's largest automotive market with nearly 25 million new vehicles sold in 2017. With these high sales numbers, it's easy see why foreign automakers like Toyota, one of the world's largest automakers, want to build models that appeal to Chinese customers and grow its presence there, which the company intends to do.

According to a report by Bloomberg, Japan's Toyota Motor Corp has announced it intends to triple its vehicle offerings in China by 2030. The automaker is planning to to ramp up production in China to 3.5 million vehicles annually by then, in a renewed push to make up lost ground in the world's biggest market, sources told Bloomberg.

Toyota aims to boost Chinese capacity to 2 million vehicles annually by the early 2020s on its way to the 3.5 million-vehicle-a-year production target, two of the people said.

The move comes as Chinese officials warm to the hybrid technology that Toyota pioneered with the Prius, amid a realization that electric vehicles alone probably won't be able to achieve Beijing's ambitious environment targets. To hit its sales targets, Toyota must also compete with Volkswagen and General Motors in China.

Toyota produces 1.16 million cars in China annually, and sold 1.3 million there last year giving the automaker about a 4.5 percent market share. In contrast, Volkswagen AG and General Motors delivered more than 4 million vehicles each. Geely, the parent company of Volvo, overtook all its Japanese rivals to became China's third-biggest automaker by sales this year.

GM topped 4 million vehicle sales in China for the first time, as 2017 sales rose 4.4% to 4.04 million. While sales of Volkswagen AG, GM's main rival in China, were up 3.7% in the January-to-November period. Volkswagen sells more cars than any other foreign automaker in China.

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The Toyota Levin HEV is manufactured in China by the Guangzhou-Toyota joint venture

China also plans to lift the caps on foreign ownership by 2022, opening up the China market for foreign automakers like Toyota to build cars there. Currently, foreign automakers are required to set up 50/50 joint venture with a Chinese partner in order to build cars there.

Toyota is also working to correct its course in a market where VW, GM and local manufacturers such as Geely Automobile Holdings Ltd. are strengthening their lineups with plug-in hybrid models.

Toyota has been lagging behind other automakers on the development of plug-in hybrid and electric vehicles. Instead, Toyota focused its efforts on developing hydrogen fuel cell technology. Toyota's first hydrogen powered vehicle the Mirai, first went on sale in 2014.

Toyota also delayed the introduction of a plug-in hybrid Corolla until next year, with an EV version of its compact crossover C-HR not due until 2020.

To reach its targets, Toyota plans to expand capacity at its Tianjin assembly plant by 120,000 units annually with local partner China FAW Group Co., according to a document posted on a local government website. The investment will total 1.76 billion yuan ($258 million), with 110,000 of the vehicles being plug-in hybrids and the remainder EVs, according to the document.

Additionally, Toyota will build a new factory in Guangzhou with its other local partner, Guangzhou Automobile Group Co. with a capacity to build 200,000 vehicles a year, Nikkei reported over the weekend. The joint venture is also expanding its existing facilities to make an additional 120,000 cars, bringing annual capacity to 1.7 million units by 2021, the newspaper said.

In an effort to curb air pollution, the Chinese government is aiming for a fifth of car sales by 2025 to be so-called new-energy vehicles (NEVs), which include fully electric models and and plug-in hybrids. Quotas for NEV production go into force from next year.

In 2017, sales of electric passenger cars in China rose 72 percent to 578,000, easily surpassing the 144,000 sold in the U.S. last year. However, EV sales comprised just 2.7% of China's total auto sales, so there is room for automakers to introduce new electric models in China.

At the Beijing auto show this spring, Toyota unveiled plug-in electric hybrid versions of its Corolla and Levin marking Toyota's first overseas production of PHEVs. Both models are due to go on sale in 2019. The company is also developing an all-electric vehicle on its own, which the company has said should hit the market in 2020.


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