Toyota Improves Sales Target in China Reliance on FAW Toyota

The Toyota Group’s global sales target for 2012, including Daihatsu and Hino, was revised upwards to 9.76 million units from 9.58 million units released in February this year, an increase of 23% year-on-year. Specifically, the Toyota brand’s global sales target has increased to 8.75 million units, which is a year-on-year increase of 23% from the 7.1 million units in the same period last year and an increase of 2% from the target of 8.58 million vehicles announced in February this year.

The reason why Toyota increased its sales target was Toyota’s report that sales growth in Japan, the United States, Southeast Asia, and the Middle East was one of the main reasons for the increase in global sales in the first half of this year. As for the Chinese market, Toyota said that the target of more than one million vehicles (more than 10% year-on-year increase) set at the beginning of the year will remain unchanged.

It is not difficult to see that the Chinese market is critical to the completion of Toyota’s global sales target. The stability of the Chinese market and its long-term play is definitely a strong guarantee for Toyota’s goal. At present, Toyota has two vehicle joint ventures in China, FAW Toyota and GAC Toyota, but there is a significant gap in their contribution.

According to the actual gap data, in July 2012, GAC Toyota completed sales of 26,000 vehicles, a year-on-year decline of 10.6%.

Since the earthquake and tsunami occurred in Japan, the Japanese auto industry has had a tremendous impact, and it has spread to Japanese automakers including overseas markets including China. GAC Toyota has not been spared. From January to July this year, GAC Toyota’s cumulative sales have just been equal to its sales figures in 2010, so GAC Toyota’s sales this year are almost equal to no growth.

In contrast, FAW Toyota's performance is more eye-catching. In July this year, FAW Toyota achieved sales of 48,000 vehicles, a slight increase of 1.2% from the previous quarter and a 2.9% year-on-year decline. From January to July, FAW Toyota sold a total of 336,000 vehicles, an increase of 30.4% year-on-year. Of course, FAW Toyota will not be able to shake off the impact of Japan's earthquake and tsunami, and its growth will also have water.

However, compared with normal production and sales years (eg 2010), the cumulative sales of FAW Toyota from January to July have basically increased by more than 20%.

In the overall downturn of the auto market, FAW Toyota’s growth has been strong. It seems that Toyota’s goal in China this year relies mainly on FAW Toyota. In fact, FAW Toyota also has an absolute share in Toyota's domestic cars in China. Taking 2011 as an example, some of Toyota's passenger vehicles sold 800,000 vehicles in China, of which FAW Toyota accounted for nearly 66% of the total, and the ratio would be higher if commercial vehicles were added. GAC Toyota only accounts for about 34%.

From the sales target alone, Toyota's reliance on FAW Toyota can be imagined.