TOKYO, MAY 23: Toyota Motor Corp, the world??™s biggest automaker by market value, said it is investing 3.82 billion yuan ($476 million) with one of its partners to make Camry sedans in China to boost its share in the world??™s third-largest vehicle market.
The company will make 50,000 Camrys this year at its factory in Guangzhou, China, it said in a statement today. The company plans to eventually build up to 200,000 units depending on demand,
Toyota executive vice president Yoshimi Inaba said in an interview on May 18.
Toyota is trying to win customers in China from rivals General Motors Corp and Honda Motor Co. Toyota has 5% of China??™s passenger car market after it began selling locally made cars in 2002. Toyota makes Vios compact cars with FAW Group Co and will produce the Camry sedans with Guangzhou Automobile Group Co. ??????We will add more models,??™??™ Inaba said, declining to elaborate which models will be added. ??????The story isn??™t going to end with just the Camry.??™??™
Toyota, which has invested 215 billion yen ($1.93 billion) in China so far, currently has annual production capacity of 3,40,000 units in the world??™s most populous country. The automaker plans to expand total production in China to 6,90,000 units eventually. The carmaker has 116 dealers for its Guangzhou venture, 280 for FAW and 12 for Lexus luxury vehicles in China, Inaba said. The automaker will stop exporting the model to China.
It currently ships about 2,000 to 3,000 Camrys a month.
Honda Motor Co, which started local production in China in 1999, already has a venture with Toyota??™s partner Guangzhou Automobile and produces the Accord, a direct competitor to the Camry. The Camry will cost between 197,800 yuan and 2,69,800 yuan, with 2 or 2.4 liter AZ engines made by Guangqi Toyota Engine Co, another joint venture with Guangzhou.
In China, the Accord is offered from 1,99,800 yuan to 2,89,800 yuan with engines ranging between 2 to 2.4-liters, while Nissan Motor Co??™s Teana is available for between 2,19,800 yuan to 3,61,800 yuan with 2 to 3.5 liter engines. GM sells its Buick Regal for between 1,83,800 yuan and 2,84,800 yuan. Toyota has an annual global sales target of 6,50,000 units for the Camry. The Camry will also be produced in Russia and at a Fuji Heavy Industries Ltd. factory in Indiana in 2007. The venture has an annual capacity of 200,000 units.
Toyota will develop a new small four-door low-priced car to meet growing demand in emerging markets, including Brazil, Russia, India and China, as well as Eastern Europe, Inaba said.
???There is a general need for a cost effective model with good quality,??™??™ said Inaba. ??????It??™s going to be a passenger four-door model.??™??™
Currently about 40% of China??™s vehicle market is comprised of mini cars and commercial vehicles. Toyota competes in the remaining 60%, Inaba said. Toyota??™s smallest vehicle sold in China is the Vios compact car that comes with either a 1.3 or 1.5-litre engine. Toyota is ??????absolutely interested??™??™ in the mini car segment, Inaba said. Local makers currently dominate the market with lower prices and Toyota has not yet found a way to compete. Toyota plans capital spending of 1.55 trillion yen this fiscal year, two-thirds of which will go to expanding production machinery for new or redesigned vehicle models , according to Koji Endo of Credit Suisse.
??????Toyota??™s strategy in China should work once it gains more share in the small car segment and gains a higher profile,??™??™ said Ashvin Chotai, an analyst for Global Insight Inc.