WEDNESDAY, OCTOBER 9, 2002
Toyota rolls into China with locally made car
REUTERS
TIANJIN: Toyota Motor rolled out its first Chinese-made car on Tuesday as Japan's top automaker muscles its way into one of the world's fastest growing markets.
Toyota - which hopes to sell 30,000 of its locally made 1.3-1.5 litre Vios sedans a year - has lagged rivals in entering China. The company trails Honda Motor, General Motors and Volkswagen, which alone holds about half the China car market.
At stake is a market for passenger cars expected to grow 40 percent to a record one million cars this year, making China one of the world's most rapidly growing auto markets.
Global carmakers have been increasing their forays into China's auto market, hoping to cash in on low production costs and rising urban incomes.
Last month, Nissan announced a billion-dollar plan to make 550,000 vehicles in China by 2006. Korea's Hyundai Motor Co and its KIA affiliate plan to boost production in China more than 20-fold to about 800,000 vehicles in 2010, the Korea Economic Daily reported on Tuesday.
The new Toyota model is part of a broad agreement Toyota struck in August with China's biggest automaker, First Automotive Works, to produce 300,000 to 400,000 luxury sedans, compacts and sport-utility vehicles annually for China by 2010.
The four-door Vios would sell for 115,000 yuan to 195,000 yuan ($13,900 to $23,600), Toyota said in a statement at a ceremony in the northern port city of Tianjin.
The high-end model would offer a DVD voice navigation system for use in Beijing, Shanghai, Tianjin and Guangzhou - among China's largest and richest cities. Other features include an optional automatic transmission and a premium stereo system.
Price important
The Vios is aimed at white-collar private buyers and companies, and would compete with Volkswagen's Bora and Santana sedans, Mazda's Familia and Brilliance China's Zhonghua, analysts said.
"Toyota's brand has very high recognition in China, but how well this car sells depends on the features at each price level," said analyst Yale Zhang of Automotive Resources Asia.
"Chinese customers are not mature and make decisions based mainly on price and recommendations from friends," he said, adding that the 30,000 annual sales target was reasonable.
Price is a big factor in the Chinese market, where car ownership had been off limits to all but a select few until the past five years thanks to high tariffs.
China's entry to the World Trade Organisation late last year has slashed tariffs on car imports, increasing competition and sparking successive price cuts from both Chinese and foreign carmakers.
Toyota is rolling out the Vios with partner Tianjin Automotive Xiali Co. Ltd, which is merging with FAW in the Chinese auto industry's biggest ever restructuring effort.
"The interesting thing about Toyota in China is not this car but the parts supply and infrastructure Toyota has been building up over the past few years as they tried to get a deal together to make a car," said Denis Simon, dean of the U.S.-based Lally School of Management and Technology. "Once they had the car deal, they could put it together really quickly because they had all these idle parts sort of lying around."
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