Toyota Misses China Sales Target as Dealer Losses MountMa Jie
Toyota Motor Corp. delivered fewer vehicles in China last year than it targeted, as the slowing growth in the world’s largest auto market and vehicle stockpiles led some of its dealers to threaten to drop out of its sales network.
Sales rose 12.5 percent to 1.03 million units in 2014, missing its projection for 1.1 million, the Toyota City, Japan-based automaker said in an e-mailed statement. The company kept its target to sell 1.1 million vehicles this year.
Some dealers of FAW-Toyota Motor Sales Co. -- the sales company of one of the Toyota joint ventures in China -- may have to stop selling FAW-Toyotas or shut down because of losses, according to the China Automobile Dealers Association. The trade group is seeking about 2.2 billion yuan ($350 million) in subsidies from FAW-Toyota to help meet costs caused by excess inventory.
Auto dealers have complained of being forced to meet unrealistic sales projections in order to qualify for year-end bonuses as foreign automakers expand their manufacturing capacity and number of distributors to chase market share. Bayerische Motoren Werke AG agreed to pay 5.1 billion yuan to distributors in China to help cover losses after retailers stopped ordering its cars, according to the dealer group.
Unsold vehicles of all makes on dealer lots rose to the highest level in November since August 2013, according to data from China Automobile Dealers Association. Inventories fell in December but “remained high,” the group said today.
While Toyota trailed its own sales projection, it joined General Motors Co. and Volvo Cars among foreign brands that outpaced the industry. Demand cooled last year as economic growth slowed and more cities imposed limits on new vehicles to fight pollution and traffic congestion.
GM boosted its sales in China by 12 percent to 3.54 million units last year, compared with the estimated 7.5 percent growth for the industry, according to a statement on the automaker’s website.
“GM performed well ahead of the overall industry in China,” said Matt Tsien, president of GM China. “We experienced especially strong growth in demand in the luxury segment as well as in the SUV and MPV segments.”
China became the largest market last year for Volvo Cars, owned by Zhejiang Geely Holding Group Co., with sales gaining 33 percent to 81,221 units.