Toyota is to stretch a production reduction at one of its joint ventures in China as the Japanese auto giant feels the pressure from the shift to electric vehicles and the rise of domestic brands like BYD.
The output cut, which was initially for October and November, will be extended by three months, Toyota’s joint venture with China’s state-owned FAW Group announced.
The move is aimed at easing inventory pressure on dealers to ensure they can operate well in the “severe market environment”, the statement said.
“Production from December to February next year will continue to be reduced by a large amount,” FAW Toyota said.
As a result, car sales to Toyota dealers would be reduced to 66,000 units in December, 60,000 units in January and 38,000 units in February, it added in the letter.
Toyota declined to comment on its production or the letter.
While Toyota has avoided the kind of hit other Japanese automakers such as Nissan Motor Honda Motor have taken in China from the shift to EVs and the rise of home-grown brands, it still faces pressure in the world’s biggest auto market.
Chinese rivals such as BYD have been gaining market share, thanks to its plug-in hybrids and pure electric cars at competitive prices.
In July, Toyota also terminated early the contracts of about 1,000 dispatch workers at its joint venture with Guangzhou Automobile Group (GAC), due to production levels.
Toyota, ranked third in sales after BYD and Volkswagen in China, sold 1.265 million cars to dealers in the first nine months, data from China Association of Automobile Manufacturers showed, down 9% from the same period a year ago. The CAAM data does not include imported cars.
- Reuters with additional editing by Sean O’Meara