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According to Nikkei Asia, Toyota has just announced its plan to build its first factory in Shanghai, China, by 2027. The facility will produce Lexus luxury vehicles, catering to the needs of the country’s massive population.
Toyota is one of the few foreign brands choosing to expand its operations in the Chinese market during this time. For many years, Toyota has been doing business in China through joint ventures with local automakers such as FAW and GAC. Thanks to these partnerships, Toyota sold approximately 1.75 million vehicles in China in 2023, while Lexus models were imported directly from Japan.
Although Toyota’s sales declined in 2023, the drop was a modest 2%, far outperforming its competitors. In contrast, Lexus saw a positive performance, with a 3% increase in sales compared to the previous year.
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Lexus ES in China. Photo: Lexus Enthusiast |
While other Japanese automakers like Nissan, Honda, and Mitsubishi have scaled back their operations or even closed factories due to underwhelming performance, Toyota stands as a notable exception. Honda, also in a joint venture with GAC, faced similar challenges, leading to the closure of a gasoline-powered vehicle factory in October. They have retained their electric vehicle factory in Guangzhou, which began operations in late December.
Both Honda and Nissan saw their sales plunge by over 10% at the end of 2023 compared to the previous year. Mitsubishi has gone a step further, announcing a complete cessation of its business operations in China as of early 2024.
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