Toyota aims to ramp up car production in China. Picture: BLOOMBERG
Toyota aims to ramp up car production in China. Picture: BLOOMBERG

Tokyo — Toyota is aiming to triple car production in China by as soon as 2030 in a renewed push to make up lost ground in the world’s biggest market, say people familiar with the plan.

Asia’s largest carmaker aims to produce 3.5-million vehicles annually in China around that year while boosting imports to the country to 500,000 vehicles, the people said, asking not to be identified as the internal goal is private for now.

Toyota can currently produce 1.16-million cars in China annually, and sold 1.3-million there in 2017 for a 4.5% market share. Volkswagen and General Motors (GM) delivered more than 4-million each.

The foray comes as Chinese officials warm to the hybrid technology Toyota pioneered with the Prius, amid a realisation that electric vehicles alone probably will not be able to achieve Beijing’s ambitious environmental targets, two of the people said.

The government is aiming for a fifth of car sales by 2025 to be so-called new-energy vehicles. Stringent quotas for production of these go into force from 2019.

Toyota is working to correct its course in a market where VW, GM and local manufacturers such as Geely are strengthening their presence with line-ups heavily featuring plug-in vehicles. Geely, controlled by billionaire Li Shufu, overtook all its Japanese rivals to became China’s third-biggest carmaker by sales this year.

By contrast, Toyota had to delay the introduction of a plug-in hybrid Corolla until 2019, with an electric version of its compact crossover C-HR not due until 2020.

New factory

The China push is one way Toyota is adapting to fast changes in the car market — a focus on self-driving vehicles is another. On Tuesday, Toyota said it was investing $500m more in Uber Technologies and it planned to manufacture minivans loaded with the US company’s software, with testing slated to begin on Uber’s ride-sharing network in 2021.

Some of the China-made vehicles may be bound for other markets in Asia. Nanfang Daily, the Guangdong provincial government’s official newspaper, cited Toyota’s top China executive as saying the country would become a hub for the company’s new-energy vehicle exports to the rest of Asia. Toyota declined to confirm the comments.

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

Shares of the car maker rose 0.6% in Tokyo on Wednesday. They have fallen 2% this year, compared with about a 6.5% decline for an index of Japanese car manufacturers including Toyota. The company plans to expand capacity in Tianjin by 120,000 units annually with local partner China FAW Group, according to a document posted on a local government website.

The investment will total 1.76bn yuan ($259m), with 110,000 of the vehicles being plug-in hybrids and the remainder full electric vehicles, according to the document.

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

Toyota said it was studying how to reinforce its organisation to accelerate its Chinese business, but declined to comment on specific moves.

The plans do not come without challenges. After years of rapid growth, the Chinese market is showing signs of cooling. Vehicle sales grew just 3% in 2017, the slowest rate in recent years, with a similar pace forecast for 2018, said the state-backed China Association of Automobile Manufacturers.

Even so, China has been improving access to its market, slashing car import duties to 15% from 25% in July, and starting to ease rules limiting foreign ownership of joint ventures.

That compares with Toyota’s biggest market, the US, where President Donald Trump is said to be considering tariffs on cars of as much as 25%, even as that market shrinks.

Toyota is building a factory in Alabama after Trump took to Twitter in 2017 to criticise the firm’s plan to make Corollas in Mexico. Toyota sold more than 2.4-million cars in the US in 2017, almost twice as many as in China.