Japan's biggest car manufacturer Toyota Motor Corp. expects its sales in China to easily top 500,000 vehicles in 2008 with the launch of at least two new cars but 600,000 could be tough, a senior executive said today.
Toyota, a latecomer to the highly contested Chinese market, has quickly climbed up the ranks since starting mass local production in 2002, trailing only Honda Motor Co. in volume among its domestic peers.
Last year, Toyota placed sixth in the passenger car market led by Volkswagen, General Motors and Hyundai, up from 10th in 2005.
In mid-2007, the world's second-biggest automaker is due to launch an all-new version of the high-volume Corolla sedan, followed by the roll-out in 2008 of the Yaris subcompact, both of which would become core models in its Chinese line-up.
"If Corolla sales go as planned, that would add about 100,000 units next year and total sales of 500,000 units would be the bare minimum," according to Yoshimi Inaba, executive vice president in charge of Toyota's Chinese operations.
This year, Toyota expects its Chinese sales to jump 43 per cent to 430,000 units, excluding Hong Kong. For the first quarter, it sold just over 100,000 vehicles, up about 67 per cent from the year-earlier period.
But Inaba said that while sales of the new Camry, launched from a new plant in Guangzhou last June, had so far met the company's high expectations, Toyota would continue to proceed cautiously in China, where he said the competitive tide tended to turn abruptly as rival products emerge.
The Camry battered sales of Honda's once-popular Accord, but Inaba noted that it could just as easily be hit by a full remodeling of Honda's flagship expected some time next year, making sales of 600,000 units challenging for 2008.
Toyota aims to sell 150,000 Camrys this year and about 80,000-90,000 Yaris subcompacts a year, both at the 200,000-units-a-year factory in Guangzhou. With overtime and tweaks to the work shift, the plant would be able to handle the combined volume of up to 240,000 units, Inaba said, stressing that it was too early to consider a new factory.
"We can't think about a new factory until we can be assured of annual Camry sales of about 200,000 units," he said.
Inaba, who is set to retire from Toyota in June after leading its Chinese operations for the last two years, said Toyota continued to stand by its goal of taking 10 per cent of the Chinese auto market in 2010, but conceded that reaching that milestone would be "extremely difficult."
In 2006, Toyota's share of the overall market was 4 per cent.
If the total automobile market including trucks and buses grew to 10 million units by 2010 as many predict, that would mean Toyota would need sales of 1 million units, Inaba said, and without any commercial vehicles.
"I expect that at that time, passenger vehicles would make up less than 70 per cent of the total market. That means we'd need a market share of about 15 per cent in passenger cars, and that's going to be very, very difficult," Inaba said.
Toyota eventually wants to enter the commercial vehicle market, Inaba said, but added that was not possible until stricter safety and other regulations are introduced to prompt an upgrade in trucks and buses.
"We're waiting, but we don't see it happening any time soon," he said.
China is Toyota's second-biggest overseas market after the United States and is contributing more and more to its earnings. The company has estimated its group net profit would total 1.55 trillion yen ($13 billion) for the business year ended March 31.