Shanghai January 10 (Gasgoo.com) In an interview with First Financial Daily, Managing Director of Toyota Automobiles Mori Satoru made a clear statement saying that, "Toyota China will not consider establishing joint venture brands for the foreseeable future." In the heated debate between domestic Chinese brands regarding joint management, this kind of declaration may win the praise of independently managed brands.
However, as this statement was made, several in the media questioned if this was the same whose understanding of the domestic market helped Toyota China pioneer and prosper. A key reason behind this is that joint brand ownership has already gained the strong government support, with the two other Japanese automobile giants, Nissan and Honda, having unveiled new models under joint management.
Mori Satoru further explained his position by saying, "Since Toyota has yet to make its best performance, our overall market share is still not satisfactory." This statement came as a surprise to many, because Toyota has historically been a stalwart in the automobile industry, with the so-called Toyota production method garnering worldwide praise.
Mori Satoru used a few figures to summarize his expectations for 2011, saying, "Through hard work we hope to achieve sales of 900,000 vehicles." With Toyota China having sales of 80,000 vehicles in 2010, 90,000 vehicles represents a sales increase of approximately 7%, far under the widely accepted estimation of 15% growth in the Chinese automobile market.
Although joint brand management is both supported by the government and pursued by Honda and Nissan's Chinese divisions, with the first model under the Guangqi Honda name about to hit the market, Mori Satoru is still steadfastly opposed to the notion of Toyota pursuing joint management.
He holds that since Toyota Automobiles only constitutes 5% of the overall Chinese market, it still needs time to gain consumer trust and brand recognition. Only until "the public strongly believes in the quality of the Toyota brand" does he believe that the concept of joint brand management will be well-accepted.
In analyzing the Chinese automobile consumer base, joint management is seen as an important step in gaining second- and third-class consumers. Via this ownership model, jointly managed enterprises can easily enter areas of the market which in the past were exclusively held by independent local brands, allowing them new commercial possibilities. In addition to jointly-owned brands such as Honda, Nissan and GM, Volkswagen, Peugeot Citron and others have also stated interest in exploring possibilities in joint management.
However, in facing the ever-increasing challenges the Chinese market poses, Mori Satoru asserts that Toyota's core philosophy remains to first ensure manufacturing quality and to offer its customers more affordable products in the future. Currently Toyota's business is focused on mid- and high-end automobiles (constituting 60-70% of total production, with vehicles under 1.6L making up the remaining 30%), in hopes of gaining consumer appreciation for its high quality and advanced technology.
Mori Satoru further states that Toyota will probably not manufacture an automobile with a 50,000-60,000 ($7539-$9047) yuan price tag for the Chinese market. While Toyota will increase research efforts in response to cheap automobiles offered by domestic manufacturers such as Chery, it may never sell a vehicle in that price range. He says, "we will not immediately start competing with Chinese manufacturers, instead we will first compare ourselves with Western enterprises, and from there gradually adjust our price to 80,000 or 90,000 yuan."
