Toyota integrates its business in China, and the joint venture brands of the two automakers embrace integration | Exclusive from 36Kr
Toyota's China region, under performance pressure, is undergoing a series of personnel adjustments.
Several insiders told 36Kr that since 2025, Toyota has initiated multiple personnel adjustments in the China region. In addition to appointing Li Hui, the first Chinese general manager of Toyota China, Another change has attracted the attention of Toyota China employees. That is, Fujiwara Hiroyuki, the general manager of GAC Toyota, will be transferred to FAW Toyota as the general manager.
"It is rare to have the general manager of GAC Toyota become the general manager of FAW Toyota." When it comes to this personnel adjustment, a senior Toyota person told 36Kr. In addition, Wang Junhua, the deputy general manager of IEM, Toyota's intelligent electric vehicle technology research and development company in Changshu, will also join FAW Toyota.
"The performance pressure is relatively high, and Toyota's various adjustments and attempts have significantly accelerated, including the appointment of a Chinese executive as the general manager." A Toyota person said.
Along with a series of personnel adjustments, Toyota is also planning a larger business integration.
An insider told 36Kr that Toyota plans to optimize the "twin model" strategy in the China region, and a preliminary direction has already been determined. That is, at the product level, some "twin models" will be merged, and in the future, only one of them may be retained for sale. "Twin models" refer to two models developed from the same source, such as GAC Toyota Levin and FAW Toyota Corolla, GAC Toyota Camry and FAW Toyota Avalon, etc.
"Otherwise, in order to compete for customers, the dealers of the two companies will inevitably reduce prices and compete with each other." The source revealed, "The profits lost are all Toyota's."
An insider said that after the integration of vehicle models, the two dealers, FAW Toyota and GAC Toyota, will jointly sell them and share the profits.
In response to the news that some "twin models" will be integrated, FAW Toyota denied it to 36Kr, stating that the company currently has no such plan.
Different vehicle models correspond to different existing systems such as production bases and sales channels, and the difficulty of "combining into one" is not small. The insider revealed that one of the currently discussed solutions is that after the model integration, the bases of both sides can continue to produce, "and a unified vehicle logo will be attached". The relatively more difficult part in the integration is the sales channel, "After all, how to divide the profits requires some discussion among all parties."
Reducing internal consumption and integrating resources to face the outside world will become a key issue for FAW Toyota and GAC Toyota.
Toyota Urgently Needs to Protect Its Profits in the China Region
In 2021, Toyota Motor sold 1.94 million vehicles, setting a new sales record in China for the ninth consecutive year. Since then, China's new energy vehicles and independent brands have begun to grow rapidly, and Toyota's sales in China have begun to decline. By 2024, Toyota's sales in China dropped to 1.776 million vehicles.
Behind the decline in performance is the rapidly increasing competitive intensity that Toyota faces in China.
Take GAC Toyota Camry, Toyota's most popular B-class sedan, as an example. The eighth-generation Camry, which was launched in 2016, has accumulated sales of more than 1 million units in China, achieving positive sales growth for five consecutive years, and winning the sales championship in the B-class sedan market in 2022 and 2023.
In March last year, the ninth-generation Camry was launched. According to the public information of GAC Toyota, the ninth-generation Camry received 9,136 orders in the two months after its launch, while the eighth-generation model received 30,000 orders in just over a month. However, in 2024, the sales of Camry in the Chinese market were only 158,000 units, a nearly 50% drop compared to the 225,000 units in the previous year.
The BYD Qin L, which was launched at the same time, created sales of over 220,000 in 7 months. Compared with the Camry, the new energy Qin L offers more impressive data in terms of fuel consumption, power, and intelligent configuration. With a starting price of 99,800 yuan, the BYD Qin L snatched the position of the sales champion of B-class sedans from the Toyota Camry.
In addition to the "horse race" in product pricing by Chinese automakers, Toyota also faces the challenge of the shift in consumer demand.
In the past, when it came to fuel consumption and saving money, consumers always thought of Toyota first. Economic and durable have always been Toyota's golden sign. This consumer inertia has made Toyota and other Japanese automakers the first choice for Chinese consumers' family car purchases for many years.
Automakers such as BYD have broken the dominance of Japanese cars in China. The best-selling plug-in hybrid models of the Qin and Song families have made the plug-in hybrid power form deeply rooted in the minds of millions of consumers, and saving money and being durable have become BYD's brand power.
The challenge of local brands to joint-venture brands is not only played out between the Qin L and the Camry. Toyota's ace models, Corolla, RAV4 Rongfang, and Prado, are all facing the same "local threat".
Although China is not Toyota's largest market, the intensified competition deserves attention, especially against the backdrop of Toyota's global profit pressure. In the second fiscal quarter of 2025, Toyota Motor's net profit declined by 55% year-on-year, and its performance in the Japanese domestic market and the US market both showed a downward trend. Instead, the Chinese market achieved growth.
Toyota has to strengthen its attention to the Chinese market.
How Can Toyota Change the Situation?
The primary problem Toyota faces in China is to maintain sales. In the past year, it has taken the usual approach of traditional brands: reducing prices in exchange for volume.
The GAC Toyota Camry model has faced multiple rounds of price reductions after its launch. Now, the Camry with a starting guide price of 171,000 yuan has a minimum landing price of less than 140,000 yuan. Moreover, the Camry also faces internal competition from Toyota: the FAW Toyota Avalon, which is positioned slightly higher than the Camry, now has a landing price that has also dropped to within 150,000 yuan.
In Toyota, which adopts the traditional dealer distribution system, price reduction means a reduction in the profit per vehicle for dealers, or even selling at a loss.
A dealer person told 36Kr that the dealer's purchase price is generally 90 - 95% of the retail guide price, and the specific price will be determined according to the vehicle model and time node. "Now, Toyota vehicles are basically discounted by 20 - 30%, and they are selling at a loss." The main profit path for dealers is only the year-end rebate from the independent automaker.
However, if the products are not selling well and the profits are limited, the dealers will also find it difficult to bear the pressure.
"Last year, especially in central regions such as Wuhan, Toyota's dealers were withdrawing from the network in large areas." An industry insider revealed.
If the measure of reducing prices in exchange for volume continues, the situation of dealers will only become more difficult, and what Toyota loses is the real profit. An insider told 36Kr that the loss of profits is the direct motivation for Toyota to decide on business integration.
In fact, resource integration is not only Toyota's choice, but also the choice of the entire automotive industry.
Geely Automobile, which has been practicing the "multi-brand strategy" for 17 years, has merged its two sub-brands, Zeekr and Lynk & Co., moving from an expansion strategy to a stable development of resource optimization. Toyota's main competitors, Nissan and Honda, have also announced that they will merge to jointly address the problems of declining sales and business operations.
Unlike other multinational automakers' wait-and-see attitude in China, Toyota has planned a more ambitious goal for the Chinese market. The company plans to achieve an annual production of 2.5 million to 3 million vehicles in China by 2030, representing an increase of nearly 80% compared to the 2024 sales of 1.776 million.
Therefore, in addition to "cost reduction and efficiency increase", Toyota is also making targeted technological and product investments for the Chinese local market.
Toyota has established the Toyota Intelligent Electric Vehicle Research and Development Center (referred to as IEM) in Changshu, Jiangsu, whose main responsibility is to conduct research and development of intelligent and electrified technologies.
The newly appointed general manager of Toyota China, Li Hui, recently said that starting from 2025, Toyota will build its own research and development system in China. This series of measures is similar to the crisis-facing Volkswagen. Toyota is also preparing to launch an electrification and intelligentization revolution in China.
In addition to the China R & D center, Toyota has also chosen to cooperate with Chinese intelligent technology companies to accelerate its intelligentization process. The infotainment system of the ninth-generation Camry has collaborated with Huawei.
At the same time, an insider told 36Kr that the Toyota China team is also discussing the feasibility of installing the extended-range system on large models such as Coaster or Highlander. In addition, Toyota is also responding to China's plug-in hybrid product demand and promoting research and development investment in small engines.
As an automaker that has been the global profit champion for five consecutive years, Toyota is bound to embark on the path of integration and cost reduction. But Toyota also understands that contraction only solves the immediate problem, and only by investing in response to market demand can it achieve long-term development in the Chinese market.