Posted: May 8th, 2009, 2:39 am
MAY 8, 2009
<span style='font-size:14pt;line-height:100%'>Toyota, in Lapse, Sputters in China </span>
By NORIHIKO SHIROUZU
BEIJING -- Toyota Motor Corp. has hit a pothole in China, where its failure to anticipate booming demand for small cars is depressing sales as rivals like General Motors Corp. report sharp gains.
The sales slump is a blow to the world's biggest auto maker because China is the only major global auto market still growing. The problem adds to weakness in other markets for Toyota, which is expected Friday to report big losses for the year through March 31.
Toyota's China sales in the first quarter of 2009 fell 17% from a year earlier to 125,743 vehicles, even as the total Chinese market, fueled by rising demand for small cars, grew 4% to 2.7 million vehicles. GM's sales gained 17% to 363,317 vehicles, including commercial microminivans made by SAIC GM Wuling Automobile Co., in which GM holds a minority stake. Other big producers, like Japanese rival Nissan Motor Co., also reported strong first-quarter sales. GM on Tuesday said its China sales rose an even-faster 50% in April. Toyota is expected to report April sales for China early next week.
The root of Toyota's China problem is a slow response to increasing demand outside China's biggest cities for small, affordable cars -- an unexpected lapse by a company known for its fuel-efficient vehicles and generally seen as adept at grasping changes in customer desires.
Chinese consumers have been snapping up such cars, especially after the government in January announced stimulus measures that cut sales taxes on cars with engines of 1.6 liters or smaller and offered rebates for rural residents buying new cars. Meanwhile, the sweet spot of China's market has been shifting inland, a trend that accelerated last year when coastal manufacturing hubs were hit by slumping demand for Chinese exports.
Nissan, whose first-quarter China sales rose 29%, and GM have been opening showrooms in smaller cities and rural areas, rolling out no-frills small cars for farmers and other less-well-off residents.
Toyota's lineup in China is short on affordable, fuel-efficient small cars. The company "found themselves without appropriate products and enough retail outlets in [inland] markets to meet the shift," says Yale Zhang, a Shanghai-based analyst at U.S. consulting firm CSM Worldwide. Toyota's "product mix is skewed and more focused on larger cars," like its Camry and Crown models, he says. "They're paying a high price for that."
Toyota's stumble in China follows a banner 2008, when its sales rose 17% to 585,000 vehicles.
"Demand for small cars is surging. But in the longer run, we believe China's auto market will see continued demand growth for all kinds of cars, from SUVs to family cars to luxury models," says Hitoshi Yokoyama, a Toyota spokesman. "We intend to continue with our full product-lineup strategy."
To prevent further declines, Toyota is scrambling to boost output of 1.6-liter engines for the Corolla lineup by about 65% at its plant in Tianjin, China, people familiar with the matter say. But they say it may take three months or more to achieve the target.
Toyota does offer a small car in China, the Yaris subcompact. But the model has sold slowly since its introduction last May because the car is seen as being too expensive for its size. A base version of GM's subcompact Chevrolet Aveo costs about $10,500, while the Yaris starts around $13,500.
Toyota also has a commercial microminivan affiliate. But it only started selling the vehicles in 2007 and sold just 1,400 or so in the first quarter of this year. GM's Wuling affiliate sold 230,000 microminivans in the quarter, nearly two-thirds of the company's total sales in China.
Only about 25% of all passenger cars Toyota sold in the first quarter in China came equipped with engines of 1.6 liters or smaller, the cars that benefit from the tax cut. Nearly 60% of GM's passenger cars fit that bill, and including the Wuling microminivans, GM's figure was 80%. For Nissan, such vehicles accounted for 64% of first-quarter sales.
"People are coming in to take advantage of the government incentives to buy 1.6-liter cars, but we don't have much to offer," says a Toyota dealer in the southern city of Shenzhen. "The problem is Toyota isn't ramping up production of 1.6-liter engines fast enough."
Toyota aims to increase the share of Corollas, its most popular model in China, that have 1.6-liter engines to 50% from about 30%, Toyota executives say. They hope to reach that target by summer. Most Corollas now are built with 1.8-liter engines. But even with the change, the portion of tax-cut-eligible Toyotas would only rise to about 30% from 25%. The Corolla's first-quarter sales fell 10% from a year earlier.
The Toyota executives admit they were caught off guard. "We didn't expect demand for small cars and the overall market to recover so fast," one says.
source: <a href='http://online.wsj.com/article/SB124172074608797081.html' target='_blank'>http://online.wsj.com/article/SB1241720 ... 81.html</a>
the following words and phrases are for reference, and in addition, readers are to think about the reasons of Toyota's recent failure in satisfying the growing China'a auto spending.
Sputter: if something such as an engine or a fire sputters, it makes short soft uneven noises like very small explosions
pothole: a large hole in the surface of a road, caused by traffic and bad weather, which makes driving difficult or dangerous
fuel: to make something, especially something bad, increase or become stronger
lapse: small error, esp one caused by forgetfulness or inattention
rebate: an amount of money that is officially given back to someone
lineup: all the different products that a company produces
banner: extremely successful
surge: 1) to suddenly move very quickly in a particular direction; 2) to suddenly increase
scramble: struggle or compete with others, esp to get sth or a share of sth
the Yaris subcompact: 丰田在中国市场推出的雅力士微型家庭用车
Chevrolet Aveo：雪佛兰·乐骋
ramp up: if a company ramps up an activity, it increases it
catch off guard: to surprise someone by doing something that they are not ready to deal with
<span style='font-size:14pt;line-height:100%'>Toyota, in Lapse, Sputters in China </span>
By NORIHIKO SHIROUZU
BEIJING -- Toyota Motor Corp. has hit a pothole in China, where its failure to anticipate booming demand for small cars is depressing sales as rivals like General Motors Corp. report sharp gains.
The sales slump is a blow to the world's biggest auto maker because China is the only major global auto market still growing. The problem adds to weakness in other markets for Toyota, which is expected Friday to report big losses for the year through March 31.
Toyota's China sales in the first quarter of 2009 fell 17% from a year earlier to 125,743 vehicles, even as the total Chinese market, fueled by rising demand for small cars, grew 4% to 2.7 million vehicles. GM's sales gained 17% to 363,317 vehicles, including commercial microminivans made by SAIC GM Wuling Automobile Co., in which GM holds a minority stake. Other big producers, like Japanese rival Nissan Motor Co., also reported strong first-quarter sales. GM on Tuesday said its China sales rose an even-faster 50% in April. Toyota is expected to report April sales for China early next week.
The root of Toyota's China problem is a slow response to increasing demand outside China's biggest cities for small, affordable cars -- an unexpected lapse by a company known for its fuel-efficient vehicles and generally seen as adept at grasping changes in customer desires.
Chinese consumers have been snapping up such cars, especially after the government in January announced stimulus measures that cut sales taxes on cars with engines of 1.6 liters or smaller and offered rebates for rural residents buying new cars. Meanwhile, the sweet spot of China's market has been shifting inland, a trend that accelerated last year when coastal manufacturing hubs were hit by slumping demand for Chinese exports.
Nissan, whose first-quarter China sales rose 29%, and GM have been opening showrooms in smaller cities and rural areas, rolling out no-frills small cars for farmers and other less-well-off residents.
Toyota's lineup in China is short on affordable, fuel-efficient small cars. The company "found themselves without appropriate products and enough retail outlets in [inland] markets to meet the shift," says Yale Zhang, a Shanghai-based analyst at U.S. consulting firm CSM Worldwide. Toyota's "product mix is skewed and more focused on larger cars," like its Camry and Crown models, he says. "They're paying a high price for that."
Toyota's stumble in China follows a banner 2008, when its sales rose 17% to 585,000 vehicles.
"Demand for small cars is surging. But in the longer run, we believe China's auto market will see continued demand growth for all kinds of cars, from SUVs to family cars to luxury models," says Hitoshi Yokoyama, a Toyota spokesman. "We intend to continue with our full product-lineup strategy."
To prevent further declines, Toyota is scrambling to boost output of 1.6-liter engines for the Corolla lineup by about 65% at its plant in Tianjin, China, people familiar with the matter say. But they say it may take three months or more to achieve the target.
Toyota does offer a small car in China, the Yaris subcompact. But the model has sold slowly since its introduction last May because the car is seen as being too expensive for its size. A base version of GM's subcompact Chevrolet Aveo costs about $10,500, while the Yaris starts around $13,500.
Toyota also has a commercial microminivan affiliate. But it only started selling the vehicles in 2007 and sold just 1,400 or so in the first quarter of this year. GM's Wuling affiliate sold 230,000 microminivans in the quarter, nearly two-thirds of the company's total sales in China.
Only about 25% of all passenger cars Toyota sold in the first quarter in China came equipped with engines of 1.6 liters or smaller, the cars that benefit from the tax cut. Nearly 60% of GM's passenger cars fit that bill, and including the Wuling microminivans, GM's figure was 80%. For Nissan, such vehicles accounted for 64% of first-quarter sales.
"People are coming in to take advantage of the government incentives to buy 1.6-liter cars, but we don't have much to offer," says a Toyota dealer in the southern city of Shenzhen. "The problem is Toyota isn't ramping up production of 1.6-liter engines fast enough."
Toyota aims to increase the share of Corollas, its most popular model in China, that have 1.6-liter engines to 50% from about 30%, Toyota executives say. They hope to reach that target by summer. Most Corollas now are built with 1.8-liter engines. But even with the change, the portion of tax-cut-eligible Toyotas would only rise to about 30% from 25%. The Corolla's first-quarter sales fell 10% from a year earlier.
The Toyota executives admit they were caught off guard. "We didn't expect demand for small cars and the overall market to recover so fast," one says.
source: <a href='http://online.wsj.com/article/SB124172074608797081.html' target='_blank'>http://online.wsj.com/article/SB1241720 ... 81.html</a>
the following words and phrases are for reference, and in addition, readers are to think about the reasons of Toyota's recent failure in satisfying the growing China'a auto spending.
Sputter: if something such as an engine or a fire sputters, it makes short soft uneven noises like very small explosions
pothole: a large hole in the surface of a road, caused by traffic and bad weather, which makes driving difficult or dangerous
fuel: to make something, especially something bad, increase or become stronger
lapse: small error, esp one caused by forgetfulness or inattention
rebate: an amount of money that is officially given back to someone
lineup: all the different products that a company produces
banner: extremely successful
surge: 1) to suddenly move very quickly in a particular direction; 2) to suddenly increase
scramble: struggle or compete with others, esp to get sth or a share of sth
the Yaris subcompact: 丰田在中国市场推出的雅力士微型家庭用车
Chevrolet Aveo：雪佛兰·乐骋
ramp up: if a company ramps up an activity, it increases it
catch off guard: to surprise someone by doing something that they are not ready to deal with