Toyota Greeted with Good News in China

Japanese automaker Toyota has been focusing on the middle-class market which has stronger profitability， but the launch of New Vios in China means that this Japanese company has begun to promote the strategy of small cars in this country.

Opening the way with small cars and fostering loyal fans to the brand have become a normal pattern for Toyota in China. They also helped this giant to recover from the previous sales drop due to the impact of dysfunctional braking and the political disputes.

“The profits of small cars are certainly lower than that of middle-class cars and luxury cars. But the market demand is increasing； the cost is lowering and the localization is improved. From the year of 2013， Toyota is going to launch a group of small cars with the price tag of lower than RMB 70，000，”says Ma Chunping， PR director of FAW-Toyota Distribution Co.， Ltd.

In addition， Toyota has fulfilled its promise about putting more efforts into the new energy cars in China. The maturation of hybrid cars is also a safeguard measure for its success.

The efforts in small cars

The strategy of small cars is favored for a reason. The New Vios formed the system of small cars of Toyota with Corolla and Carola. “The sales volume of New Vios per month is expected to be beyond 10 thousand units. Our goal in 2014 was to sell 140 thousand units，”Ma Chunping says.

The small car team is going to be expanded as the New Yaris of Guangzhou Auto-Toyota is going to be launched in Guangzhou. The two joint ventures of Toyota in China， Guangzhou Auto-Toyota and FAW-Toyota work together in the small car market， hoping to win good performance.

Actually， early in March 2013， Toyota once launched the “cloud driving plan” in China. This is a comprehensive project covering both the traditional vehicles and new energy vehicles. At that time， the small cars were mentioned as well. However， at that time， Toyota paid much less attention to the small cars than it paid to the new energy vehicles.

This time， the newly-launched New Vios is considered to be the first model of Toyota for the strategy of small cars. Its price range is between RMB 69.8 thousand and 112.8 thousand. Toyota attaches great importance to the New Vios and has high expectations of it. According to Ma Chunping， Vios is the first car model Toyota brought into China. It shoulders the task of recruiting fans of Toyota. For both Toyota and FAW-Toyota， this is a very important car model.endprint

The political dispute between China and Japan over the Diaoyu Islands early this year once greatly affected the sales of Toyota， as well as other Japanese auto brands in China. As time passed， the impact was gradually gone. For the recovery of sales in China， Toyota had a clear timetable with the set time points of post-Spring Festival and September 2013. In the first time point， the actual sales of Toyota did not have any signs of recovery. But after September， or maybe October， Toyota indeed em- barked on the way of recovery in China.

“The sales stopped dropping in August. In September the launch of new RAV4 had a great driving force for the sales of Toyota. In that month we got 15 thousand orders of RAV4. The October was when we saw the substantial growth，” Ma Chunping says.

According to the data， FAW-Toyota sold 38，348 units in October， up 81.4% over a year before and 7% over the previous month. Cai Jianming， a consultant at China Investment Consultancy， attributes the increase of sales to two points. One： Japan had no direct political conflict with China after the Diaoyu Island dispute， which eased the political stress； two： Toyota made the new products tailored for the Chinese consumers， replacing its previous pattern of designing products for consumers of other regional markets before being brought into China Three： the price is more user-friendly， making consumers think them worth buying.

More Efforts in New Energy Cars

Toyotas recovery in China is supported by its strategy of small cars. Its future success in the worlds largest auto market is possibly guaranteed by its efforts in the new enery cars.

On November 14， Toyotas China R&D Center in Changshu， Jiangsu was finally completed after two years construction.

This center serves as an important base for localizing the hybrid energy vehicles and plug-in hybrid energy vehicles in China as soon as possible. It is known that the first batch of Chinamade hybrid cars of Toyota will come out in the market in 2015.

Toyota started the research into the hybrid cars 40 years ago. The Toyota cars with hybrid energy of oil and electricity have no need to be charged and can save the usage of oil by 40%. This could largely reduce the gas emission， which is definitely good for easing the severe air pollution in China.endprint

The hybrid cars also act as a new growth point for Toyota. From 1997 to now， Toyota sold about 6 million hybrid cars in the world. In 2012， it sold over 1 million units， accounting for over 10% of its total sales volume. Japan and the United States are the biggest markets for its hybrid cars. Now it has shifted its focus to the Chinese market.

However， the Chinese market seems to be a fortress for the hybrid cars of Toyota， which proved to be reliable and popular in other countries. Toyota brought its Prius Hybrid into China in 2006， but by the end of 2012， fewer than 10，000 units had been sold， one tenth of the annual sales volume in the United States.

This is not because of the political conflict， but the relatively higher price. Prius Hybrids price is 40-50 thousand yuan higher than ordinary Prius， which scared away many consumers.

In addition， consumers know very little about the hybrid cars， which definitely affected the promotion of hybrid cars. The Chinese government also lists the hybrid cars as energy-saving vehicles instead of new energy cars and they are free of the favorable policy. Only the plug-in hybrid cars can enjoy the governmental subsidies.

Thats why Toyota established the Changshu R&D Center， which is its first fully-owned R&D center in China and its largest R&D center in the world. It is mainly responsible for the localized development of energy-saving cars and the components. The production of motors， batteriesand inverters for hybrid cars is to be localized. And the research results and products will be supplied to FAW-Toyota and Guangzhou AutoToyota.

It is said that the price of Toyotas hybrid cars will be greatly lowered after being localized. This will boost the sale of hybrid cars in China. Dong Changzheng， vice general manager of Toyota China， expects the hybrid cars to contribute to 20% of Toyotas total sales in China.

Akio Toyoda， President of Toyota， lays great expectations over the R&D center in Changshu. He was present in the cornerstone laying ceremony last year， when he greeted the audience that“China is very important” in Chinese. After the foundation of the center， he hopes that it could serve as new base for the new business opportunities of Toyota in China.endprint