Price cuts, production cuts, Toyota really can't sell anymore?

Header image courtesy of IC photo

Recently, a "letter to FAW Toyota's dealer partners" has been widely circulated on the Internet. The letter pointed out that "in the current severe market environment, FAW Toyota has been paying close attention to the inventory pressure and financial pressure of dealer partners, and actively studying and quickly solving it." After intensive consultation and communication with all parties, the latest round of supply and demand adjustment plan was formally formed yesterday (November 2) afternoon, with the core purpose of quickly and resolutely relieving the pressure on dealer partners. ”

The specific production reduction plan is in October and November under the premise that production has been significantly reduced, and the production from December to February next year will continue to be significantly adjusted downward, from the perspective of dealer perception, the allocation in December will be adjusted downward to 66,000 units, the distribution in January next year will be adjusted downward to 60,000 units, and the distribution in February will be adjusted downward to 38,000 units.

Image source: Internet

As soon as the news came out, it aroused widespread attention in the industry, and the voices of "Toyota can't sell anymore" and "can't bear it" have come and gone. In the face of these doubts, FAW Toyota quickly responded, saying that this is based on the current market competition environment.

In fact, GAC Toyota, Toyota's other joint venture in China, has also basically been in a state of production reduction since the beginning of this year. According to the production and sales data disclosed by GAC Group, in the first 10 months of this year, GAC Toyota's production was 764,000 units, a year-on-year decrease of 9.44%.

On the whole, Toyota is indeed under a lot of pressure in China this year. GAC Toyota's glorious record of breaking one million units for the first time last year has not been repeated, and FAW Toyota's goal of one million units has also failed ahead of schedule. Is it true that as the outside world says, Toyota can't sell?

one

You can't lie down and count the money

Earlier this month, Toyota Motor released its financial results for the second fiscal quarter (July-September 2023), achieving an operating profit of 11.44 trillion yen, a year-on-year increase of 24%, and a net profit of 1.28 trillion yen, an increase of 194.24% year-on-year. The profit margin surpassed Tesla for the second time and continued to sit firmly in the first place.

However, in the Chinese market, Toyota has indeed suffered an unprecedented impact. The intensification of the price war and the loss of electrification have made Toyota make a lot of money. From April to September, investment income from associates and joint ventures accounted for using the equity method was 123.7 billion yen, down 32.7% year-on-year.

Image source: Toyota official

"China is in the midst of very fierce price competition, especially in the electric vehicle market," said Yoichi Miyazaki, Toyota's vice president and chief financial officer.

"RAV4 Rong into the door version (176,800) has been discounted to 42,000, 196,800 and above models are about 40,005. A Toyota store salesperson told Cheshi Story. Another FAW Toyota 4S store salesperson also said that the RAV4 Rongfang has a discount of 40,000 yuan, but the current car is not very sufficient.

Several hot-selling cars under GAC Toyota are currently on sale. "The current discount margin of the Camry is basically more than 40,000 yuan," said a salesperson at a Toyota store. Similarly, the Highlander, which once needed to increase the price and wait for the car, is also reducing the price and increasing the volume, with a discount of more than 40,000 yuan for the gasoline version and more than 30,000 yuan for the hybrid version, and there are existing cars.

Image source: Autohome

When I asked about the bZ3, there were no cars in some stores. Some stores said that there was only an entry-level version of 169,800 configurations, and the current discount margin was 30,000 yuan.

"Exchanging price for volume" is the main theme of China's auto market this year. Toyota is no exception, barely maintaining the current sales scale in the case of such a big discount.

According to the data of the passenger association, FAW Toyota sold 651763 vehicles in the first 10 months of this year, a slight increase of 0.8% year-on-year. GAC Toyota, on the other hand, declined this year because of its excellent performance last year, with a total of 747997 new cars sold in the first 10 months, a year-on-year decrease of 5.7%.

It's not so much that Toyota can't sell anymore, but that it can't lie down and count money like before.

two

Emphasis on the pure electric path, but not "stud"

Admittedly, Toyota's transition to electrification has been controversial. Akio Toyoda, the former head, has repeatedly slammed electric vehicles, making remarks similar to "pure electric vehicles are developing very well now, but they are only a transition to hydrogen energy". Not long ago, because of the company's slowdown in sales, he once again said that he was right to resist electric vehicles.

Although the new Toyota president Tsuneji Sato affirmed pure electric vehicles, he also stressed that Toyota will not shift its focus to pure electric vehicles in one fell swoop.

It can be seen that from beginning to end, Toyota has never thought of "stud" pure electric. Toyota will continue to diversify its development of EV, PHEV, HEV, and FCV, and actively promote the implementation of electrification technologies such as solid-state batteries and hydrogen fuel cells.

Image source: Autohome

In the Chinese market, Toyota's several pure electric vehicles have not caused any waves. Whether it is the bZ4X under GAC Toyota or the bZ4X under FAW Toyota, the number of vehicles on the road every month this year is basically at the level of several hundred. The bZ3 is better, but the maximum monthly risk is more than 3,000 units, which is far from the target of 6,000-8,000 units.

In this regard, many people say that Toyota is lagging behind on the electrification track.

In fact, Toyota has been in the field of electrification for a long time. In 2003, Toyota began to develop lithium-ion batteries, and in 2008, Toyota established a battery research department and began to research next-generation batteries such as all-solid-state batteries.

Today, Chinese automakers have taken the lead in the smart electric track. However, the stamina of these multinational giants should not be underestimated. As Wu Qiang, co-president of Leapmotor, said, "The current leading advantage of Chinese car companies is only the gap between the first mover and the last mover, and at the same time, there are also the dividends and cost advantages of Chinese engineers." As for how advanced the technology is, you don't have to over-render. ”

"The outbreak of new energy vehicles has only been in the past two years, because the demand for electric vehicles has been determined and has gone through the early trial period. But it is precisely in these years that the market situation is complicated. The epidemic, supply chain crisis, price war, etc. have all had varying degrees of impact on the decision-making of various enterprises. Automotive analyst (Liu Ming) said.

At the 2023 Global New Energy and Intelligent Vehicle Supply Chain Innovation Conference, Wei Jianbin, full-time deputy head of the manufacturing headquarters of Dongfeng Nissan Passenger Vehicle Company and general manager of Guangzhou Fengshen Automobile Co., Ltd., also said that the epidemic has covered up the problem of the joint venture in the past three years, and the joint venture is indeed too late in the layout of new energy and has not caught up with the changes in the Chinese auto market.

Image source: Toyota official

Due to the early losses, Toyota made adjustments to its own course.

Adhering to a diversified technical path, pure electric is placed in an important position.

With the renaming of its R&D center in China, Toyota's R&D focus has further shifted to the field of intelligence and electrification. According to the plan, in the field of pure electric vehicles, Toyota will accelerate the introduction of bz pure electric series products, launch 10 new pure electric vehicles by 2026, launch pure electric large SUV next year, and debut the Lexus ES pure electric version in 2025.

In May of this year, Toyota established a BEV Factory, and President Takero Kato made his first public appearance, saying, "Changing the future with BEVs." Changes in automobiles, manufacturing, and ways of working will surely bring better development to Toyota. At the recent Tokyo Motor Show, Toyota also reserved booth C for electric vehicles and unveiled a number of electric concept cars.

叁

At present, it is still "profitable".

Although the pace of transformation is accelerating, the bullets still have to fly for a while.

For Toyota at present, in addition to the afterthought of electrification transformation in the Chinese market, it is also facing huge challenges in terms of profitability. As reported in the previous financial report, investment income in China fell by 32.7% year-on-year.

The involution of the market is still intensifying, and the penetration rate of new energy is also rising. Judging from Toyota's current actions, it still hopes for the hybrid and fuel markets in the short term. Yoichi Miyazaki also said that the hot sales of hybrid vehicles have helped Toyota build a solid financial foundation, which also provides a guarantee for the development of pure electric vehicles.

Toyota announced that it will maintain its global sales of Toyota (including Lexus) in fiscal 2024 unchanged, and lower its sales target for pure electric vehicles and increase its sales targets for Toyota's hybrid and plug-in hybrid vehicles.

Image source: Internet

For the Chinese market, in addition to the layout of hybrid vehicles, Toyota is focusing on high-margin products. For example, at this month's Guangzhou Auto Show, the new generation of domestic Prado will be officially unveiled and pre-sale will begin. Judging from the official PPT suspected of being exposed, the price of the new Prado is about 500,000 yuan, and the starting price is expected to be around 470,000 yuan.

At the same time, a new coupe from Crown will also be unveiled at the auto show. In addition, the Toyota Camry will usher in the ninth generation model, you must know that this car is currently Toyota's best-selling sedan product in China.

During the 2023 Japan Mobility Show, Akio Toyoda said in an interview that Japanese cars "must win" against Chinese cars. Akio Toyoda said, "What can we win? I think it's a point of view to win simply in terms of sales. But Japanese manufacturers transport all sorts of things on the roads of the world, and automobiles transport information as a means of transportation, as well as happiness. Japanese manufacturers need to develop new strategies to survive. ”

It is not difficult to see between the words that in the face of the current fierce competition, Toyota has accepted the reality of sales growth in China. In the short term, it may be even more critical to increase profitability with hybrids and fuels.

Image source: Toyota official

Due to the decline in the share of joint ventures, the market is full of doubts about joint ventures. Many people have asked, do they still have a play in China?

Yuan Zhongrong, former vice chairman of GAC Group, said at the 15th Entrepreneur Forum of Huazhong University of Science and Technology that the joint venture brand itself is very strong and actually has technical reserves in new energy. Due to the different situations in different countries, these car companies will have some ideas of their own.

He took Toyota as an example, as a large enterprise with a scale of 10 million, on the eve of the revolutionary change of batteries, if 10 million are transferred to lithium batteries, once the solid-state battery matures, it will inevitably cause very large losses. Based on the above considerations, Toyota has adapted to the situation in the global market. In his opinion, the reason why some of Toyota's electric vehicles do not sell well is mainly due to the safety strategy, and it is unwilling to make some concessions in terms of safety strategy like China, so it has been criticized more.

Some people believe that based on the various deployments of Tsuneji Sato after taking office, Toyota's "elephant" has turned around, but it will take at least three years to see the results. How long do you think it will be?

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