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Toyota Dealer Group in China Warns up to 10% May Quit as Losses Mount
Autonews

December 30, 2014 - 12:19 am ET

BEIJING (Bloomberg) -- As many as 10 percent of dealers for one of Toyota Motor Corp.'s China ventures are poised to drop out of the network because they can't make money on the cars they're told to sell, a dealer's group said.

Among the 523 distributors in the FAW-Toyota Motor Sales Co. group, 95 percent are losing money, said Song Tao, a deputy secretary of the China Automobile Dealers Association.

Some dealers may have to stop selling FAW-Toyotas or shut altogether because of the losses, he said. The looming defections come as the state-backed dealer's group sent a letter to FAW-Toyota on Friday seeking about 2.2 billion yuan ($353 million) in subsidies to help meet costs caused by excess inventory, according to a copy sent to Bloomberg News.

Unsold vehicles of all makes on lots rose to the highest level last month since August 2013, according to data from the dealers association.

The complaints by FAW-Toyota dealers follow similar demands by distributors this month for BMW AG and form part of a broader push by China's auto retailers to gain more autonomy from manufacturers, which currently dictate the number and type of cars they sell.

Sales targets are crucial because dealers must meet them to qualify for year-end bonuses, which account for more than half of their annual profit from selling cars, the China Auto Dealers Chamber of Commerce said this month.

Ma Chunping, a FAW-Toyota spokeswoman, said she couldn't immediately comment. A call to Toyota's public affairs office in Tokyo went unanswered and representatives for the company didn't immediately respond to an e-mailed request for comment.

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I don't pay much attention to Toyota, as nothing they build catches my attention (the FJ Cruiser was the last Toyota product I liked), but while I really don't see many here, it's still more than I expected. The Chinese-Japanese hate-hate relationship is legendary, and I wasn't expecting to see many Japanese cars here at all. Still, Toyota is FAR from being as big here as they are in the US, and their models really strike me as mid-pack, if that. 'Attractiveness' is personal, but there's just nothing cohesive or significantly appealing about the Toyotas here. They really blend in, and I can't understand why anyone here would want one.

A few small Hondas are popular, as are many Nissan models. I see the occasional Mazda6 and Mazda3, but it just doesn't seem like the Japanese are an automatic go-to in China like they are in the US.

All that said, my experience is in Shanghai and the nearby urban area, so the story might be different elsewhere.
 

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Cant say I'm disappointed - On a different note I can't see why every car company wants to be there. They have to partner up with some one, give there intellectual property away to there partner, sell small cars which = small profit and then split this small profit with there partner and then spend billions upon billions building new assembly plants if they do not want to be taxed out of the market.
 
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