Toyota Targets 2.5 Million Annual Car Production in China by 2030 to Reclaim Market Share

Toyota is set to increase its annual car production in China to 2.5 million by 2030, marking a strategic shift to regain market share lost to local competitors. The Japanese automaker plans to empower local teams and integrate expertise from joint ventures to strengthen its position in China’s competitive market.

Toyota Plans Major Production Increase in China, Aiming for 3 Million Vehicles by 2030

According to three people, Toyota wants to produce at least 2.5 million cars annually in China by 2030. According to Reuters, this update will offer local executives more autonomy in the development process and bring its Chinese sales and production divisions closer together.

The strategy, which has not been previously publicized, is a strategic shift by the world's leading car manufacturer in the largest automobile market. It highlights its desire to regain market share that it has lost to BYD and other regional competitors in recent years.

Toyota's approach differs from that of other international manufacturers, including Japanese ones, who either reduce their operations or leave China.

Two individuals said it hopes to increase production to 3 million vehicles annually by the decade's end. But according to the three, it has yet to set a formal aim. Since the issue has not been made public, each individual declined to be named.

Compared to the record 1.84 million vehicles produced in China in 2022, the more significant amount represents a 63% rise. There, 1.75 million automobiles were made last year.

According to the people, Toyota has notified a few suppliers of the planned increase to reassure component manufacturers of its dedication to China and secure its supply chain.

In a statement, Toyota responded to Reuters' inquiries: "With the intense competition in the Chinese market, we are constantly considering various initiatives." It said it would continue to work on making "ever-better cars" for the Chinese market.

According to two people, the Japanese automaker wants to increase efficiency by bringing its two Chinese joint ventures' sales and production divisions closer together.

Additionally, according to two people, it plans to delegate as many development responsibilities as possible to employees working in China, who can better understand local market preferences, especially regarding connected and electrified automobile technologies.

Toyota Shifts Strategy in China, Focuses on Local Talent and Partner Collaboration to Compete with EV Leaders

According to one source, the actions show that Toyota is becoming more conscious of the need to empower local employees to lead and expedite product development in China, as "it will be too late" otherwise.

As Chinese EV manufacturers quickly introduce reasonably priced, battery-powered vehicles with cutting-edge technology, legacy automakers—including Toyota—have been outmaneuvered in China.

Toyota revealed plans to strengthen collaboration between its two local joint ventures and its R&D center in Jiangsu province last year.

The fact that cars created separately by joint venture partners are selling better than those made with Toyota is one issue that reflects Toyota's more significant problems.

For example, the Aion EV from the GAC Group and the Hongqi brand from the FAW Group both outsell the corresponding vehicles from the GAC and FAW Toyota Motors. Toyota now plans to integrate local partners' expertise better into its cars.

The exact vehicle—"twinned vehicles"—is manufactured at joint ventures and marketed under separate names and designs. According to two people, one of the joint ventures will eventually combine production for each model.

The models will be offered at both JV dealerships.

Japanese parts providers operating in China have suffered along with Japanese automakers.

Toyota revealed at its earnings on November 6 that operating income in China declined in the first half of the fiscal year, primarily due to increased marketing expenses caused by fierce pricing competition from Chinese brands.

In the face of this rivalry, Honda Motor and Nissan Motor have chosen to scale back their local production capacity, while Mitsubishi Motors Corp. has pulled out of China.