Toyota sold 684,903 vehicles in China in the six months from April to September, down 25 per cent year on year and the lowest reading for that period since 2017.
The company attributed the fall to a soft overall market, with petrol and hybrid vehicles hit hardest as fuel prices rose.
The world’s largest carmaker is not alone. Foreign brands in China are absorbing the combined effect of weak demand and a price war that has compressed margins across the segment.
The decline is slowing, not stopping
May was the worst month of the year for Toyota in China, at 102,299 units and a 31.7 per cent year-on-year decline. The rate of contraction then moderated, to 22.8 per cent in August and 19.7 per cent in September.
Satoru Aoyama of Fitch Ratings said Toyota has held up comparatively well among foreign brands because demand for its hybrids remains relatively solid, even as cheaper Chinese electric models take share from other international names.
Fitch data show Chinese passenger vehicle deliveries down 23 per cent in the second quarter, after an 18 per cent fall in the first. The agency expects full-year sales to decline by a high single-digit percentage.
Chinese brands reached 69 per cent of domestic deliveries in the second quarter. Toyota’s joint ventures with GAC and FAW have outperformed most foreign peers, but they are now working against the same current.
The pressure moves up the supply chain
Denso, the Japanese components group, said its Chinese plants are operating at reduced utilisation as vehicle volumes fall.
Japanese suppliers also report that their customers are turning to Chinese component makers to cut costs and slow the loss of market share. That shift deepens dependence on local supply chains and has pushed some Japanese suppliers to seek compensation from their carmaker customers, having invested in Chinese capacity against the expectation of long-term supply contracts.
For Toyota the immediate question is whether hybrids keep carrying the brand in a market that has already priced hybrids as a mainstream option rather than a premium one.
Editor’s note: This is an adapted translation of the original Gasgoo report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://auto.gasgoo.com/news/202610/30I70476441C109.shtml.