Text/Wang Xinxi
According to Bloomberg, Toyota plans to set up a wholly-owned Lexus plant in Shanghai to produce high-end electric vehicles. Toyota wants to be treated like Tesla, seeking subsidies such as tax breaks, policy support, and land subsidies.
According to the previously announced plan, Toyota will develop a new electric vehicle for Lexus by 2026, which will improve from the battery to the chassis architecture, or will abandon the e-TNGA architecture used by Toyota at this stage.
Lexus localization to produce electric cars in China stems from the fact that this is actually a plan set ten years ago, and Toyota will lead the Japanese new energy vehicle manufacturing center in China with Honda, Fuji, Kawasaki and other giants combined. Later, due to the delay of the epidemic, the plan has now been restarted.
Lexus is a wise choice to do electric vehicles in China, China's electric vehicle industry chain is very complete, Shanghai has the most complete automotive industry chain in the Yangtze River Delta region, and ready-made supporting manufacturers can assemble and produce. In 2019, Tesla broke with the tradition of joint ventures for the first time in China and built the first 100%-owned gigafactory in Shanghai's Lingang area.
The Lexus RZ, which is currently on sale, has a guide price of 355,900-459,900 yuan, but this car has been beaten by Chinese trams at the same price in terms of battery life, power, and intelligence. An important reason behind this is that imported cars have raised the cost, and imported cars have to pay three taxes to Chinese customs: MFN tariff of 25%, value-added tax of 17%, and consumption tax of 1%-40%. Taxes and fees account for about 38% of the whole vehicle, resulting in a sharp increase in car prices. It is unable to support its follow-up price reduction in the Chinese market.
On the other hand, now Tesla BYD continues to conquer the global market, with the help of China's industrial chain, in order to quickly improve the comprehensive experience and product strength in terms of battery life, power, large screen, intelligent cockpit, intelligent driving, voice control, etc., and then enhance the product competitiveness of the global market.
The localization of Lexus drives price competitiveness, but maintaining quality is a problem
For consumers, the localization of Lexus may make it more and more difficult to sell cars at a higher price.
In the past, Toyota's problem of Chinese dealers selling at a higher price has always made Toyota very passive. Earlier Akio Toyoda said that he had never increased the price of Alpha exported to China, and now Alpha, which is worth 300,000 yuan in Japan, is sold for 800,000 to 1 million yuan in China. This is the Chinese dealer's own doing.
In fact, Toyota's high-end cars, including Alpha, Prado, Crown Lufang, etc., have the most outrageous price increase in China for Lexus. Whenever a new Lexus car is launched, many people discuss not what the new car has and what the power of the new car is, but how much the Lexus XX model will increase. On the eve of 315 this year, Hainan Haikou Zhongsheng Lexus 4S "If you want to pick up the car, you have to add 100,000 service fees", which caused a lot of controversy, the customer service manager was suspended, and the Lexus brand was implicated.
It can be known that the Lexus price increase has become an unbearable burden for Lexus in the Chinese market.
But despite the markup, Lexus still sells well. In the Chinese passenger car market, Lexus ranks first among imported car brands in 2023, with annual sales of 181,400 units.
Lexus sells well at a higher price, which is brought about by the quality of Japanese imports, and the extent to which the quality of Japanese imported cars can be maintained after localization is a major prerequisite for success. Lexus's pure imports have always had the marketing selling point of "Kyushu factory master craftsmen excellent craftsmanship".
After localization, as for the extent to which the original quality benchmark can be maintained, it is a key to maintain the original marketing selling point.
Some netizens found out that why is the same Camry, so different from the configuration of the United States? The original factory of the American version of Camry is equipped with a large rear wing, full of sportiness, equipped with 3.5-liter V6 plus 8AT maximum horsepower of more than 300 horsepower, 000 acceleration can reach 5 seconds, even the 2.0T Civic typer is not its opponent, but in China it becomes a 2.5-liter 4-cylinder, horsepower is only 207 horsepower, the power meat is not good, 000 acceleration takes 10 seconds. The 3.5-liter Camry abroad can be described as galloping on the battlefield. In China, it has become a household grocery cart.
Of course, in addition to power, there is also body quality, Japanese cars are also a widely criticized aspect, therefore, for Lexus, the most critical issue is to reduce the pricing through localized production, implement Lexus's quality standards to Chinese manufacturing plants, and maintain Lexus's reputation.
Behind the localization, promote the reform of China's dealer system
From January to May 2024, Lexus sold 72,275 vehicles, a year-on-year increase of 33.4%, of which Lexus ES sold 45,937 vehicles, a year-on-year increase of 58.16%. The vast majority of them are fuel vehicles.
However, Toyota mainly wants to build an electric vehicle factory in Shanghai this time to get similar treatment to Tesla, if it builds a fuel vehicle plant in China, there is no preferential policy, therefore, based on interest considerations, but with the increase in production capacity, Lexus will not rule out the production of fuel models in the Chinese market in the future.
From the current point of view, most consumers still recognize the quality and performance of Lexus fuel vehicles, but imported cars are too expensive, the production capacity is not enough, and even some models have to wait, which makes Chinese dealers provide room for price increases.
This is a headache for Akio Toyoda. One of the problems of Lexus in China is that the intricate interests of Chinese dealers are that even Toyota China can no longer be provoked, as a foreign brand has no right to speak and dominate, and the pricing power is in the hands of dealers.
The trend of electrification is in front of us, and the current core of Lexus is to do a good job in pure electric vehicles, embrace China's industrial chain, seize the trend, achieve a leap in its own product strength, and reduce the cost of car manufacturing.
But at the same time, through localization, Lexus may want to reorganize the channel system through localization to solve the disadvantages of dealers selling at a higher price, which may be a move that Lexus may promote after localization, we will wait and see.
Author: Wang Xinxi, Senior Reviewer of TMT This article is not reproduced without permission