Sales have declined, transformation has failed, and FAW Toyota still needs to review under its predicament
Quoting Meituan founder Wang Xing's view, we can understand the significance of 2022 for Toyota in this way: although this year may be the most sluggish year for Toyota in the past decade, it may also be the most shining starting point in the next decade.
This "sluggish" situation is mainly reflected in sales volume. According to statistics, Toyota's sales in the Chinese market experienced the first decline in nearly a decade, with a total sales of 1,940,600 units, a decrease of 0.2% compared with 2021. In terms of the performance of the two joint ventures, the difference is particularly obvious: GAC Toyota still delivered sales of 1.005 million units despite the difficulties, basically stabilizing Toyota's foundation in the Chinese market, while FAW Toyota performed more disguised, and through simple calculations, it can be found that its sales in 2022 will be 751,700 units, down 12.7% from 860,000 units in 2021.
From this point of view, FAW Toyota's challenges in the Chinese market are obvious. Further analysis, FAW Toyota's challenges in the Chinese market are also closely related to the development trend of the entire automotive industry. To a large extent, it can be attributed to the rise of new energy vehicles.
Forced to transform, the first battle "marginalized"
According to relevant statistics, in 2022, the cumulative retail sales of new energy vehicles in China will reach 6.736 million units, a year-on-year increase of 34%. In addition, the market penetration rate of new energy vehicles in China has reached about 30%. Globally, despite a 6% decline in overall vehicle sales in the first half of this year, NEV sales increased by 66% against the market. This trend clearly shows that new energy vehicles have become the dominant force in the automobile market, and FAW Toyota is also well aware that new energy is the direction of future development. However, for a large company like FAW Toyota, the transformation is not an easy task, but it does not mean a complete abandonment.
In terms of products, in December 2022, FAW Toyota announced at its 10 million user achievement celebration that the pre-sale price range of its mid-size pure electric sedan bZ3 was 189,800-219,800 yuan. However, when we look back at this price and product power, compared with local brand models in the same price range in the Chinese market, the bZ3 seems to be unsatisfactory in terms of configuration and intelligence, and has not formed a strong differentiated competition. As a key model for FAW Toyota to adapt to China's new energy market, the bZ3 does not seem to have completely shaken off Toyota's long-established brand confidence, which has marginalized its competitiveness in the market.
What's more worth mentioning is that the bZ3's cooperation with BYD, mainly in terms of batteries and motors, makes this car more like a model specially designed for the Chinese market, but in terms of technology and interior luxury, it still maintains Toyota's traditional style. In contrast, BYD's Seal and Han models have shown clear advantages in several aspects. In addition, some of the criticisms that consumers have about the bZ3 should not be overlooked, such as the lack of actual range, and the interior materials and design are not good. It's this somewhere design and positioning that has made the bZ3's presence in the market relatively weak since its launch.
The market is unfavorable, and the butcher's knife is swung to the dealer
FAW Toyota's recent transformation attempts do not seem to have achieved the expected results, and it is facing severe market challenges. In order to alleviate the inventory and financial pressure faced by dealers, FAW Toyota has adopted a strategy of reducing production. According to the company's latest plan, the plant's output will be revised down from December 2023 to February 2024. Specifically, the production plan for December 2023 has been revised down to 66,000 units, while production in January and February 2024 has been revised down to 60,000 units and 38,000 units, respectively. The implementation of this strategy is designed to help alleviate the operating pressure of dealers and improve their inventory situation.
At the same time, a proposal jointly launched by dealers to FAW Toyota circulated on the Internet has also attracted widespread attention. The proposal criticizes FAW Toyota's vehicle distribution strategy, arguing that it seriously violates market rules and does not fully consider the actual situation of dealers. The proposal also mentions problems with FAW Toyota's annual vehicle allocation to dealers, as well as overspending by company executives during inspections. More seriously, the proposal accuses FAW Toyota of dumping at low prices in the name of major customers, which further exacerbates the plight of dealers. The openness of these problems shows that the relationship between manufacturers and distributors has become tense to the point where it is difficult to reconcile.
Electric EV:
Although FAW Toyota, since its establishment, has operated within the framework of the group's overall strategic layout, this does not mean that it has not had the opportunity to avoid some challenges in brand development. Especially in terms of product quality, its main sales models are firmly in the top 10 of the complaint list, which obviously has a chance to be avoided. In this regard, it is a feasible solution by providing more meticulous after-sales service. Taking the bZ3 as an example, this model launched for the Chinese market, as a new product with high hopes, can indeed be strengthened in sincerity and intentions. In addition, the 4S store incident in Nanchang, Jiangxi this year is also a noteworthy example.
Of course, FAW Toyota's lag in the new energy transition, although it is a factor, should not be the whole problem. An established automaker should pay more attention to the voice of the consumer and make efforts in areas that can be changed. This includes, but is not limited to, improving product quality, improving after-sales service, product innovation to meet market demand, and accelerating the pace in the field of new energy.
In terms of product innovation, FAW Toyota can pay more attention to environmental protection and new energy technology. With the increasing global focus on sustainability and environmental protection, electric vehicles and hybrid vehicles have become the choice of more and more consumers. Therefore, FAW Toyota's development in this field is not only the demand of the market, but also the embodiment of corporate social responsibility.