Toyota stalls assembly line plans

Japanese media says carmaker reconsidering launch of new China facilities

Toyota Motor Corp is reported to be reconsidering its expansion plans in China following its recent slump in sales.

The Japanese newspaper Asahi Shimbun reported on Sunday that Toyota, one of the world's auto giants, is stalling the launch of two major assembly lines at factories in Tianjin and Guangzhou, capital of Guangdong province, after predicting sales in China were likely to continue to slow in a short term.

The company's dramatic fall in sales was attributed to anger in China over Japan's illegal "purchase" of the Diaoyu Islands.

Without disclosing a specific source, the report said that the future of the new assembly line in Tianjin - its fourth there, which is expected to have an annual production capability of 200,000 units - depends on its sales recovering in China.

The report added that the same applies to a delayed third assembly line at its factory in Guangzhou, which was scheduled to be rolling out 200,000 vehicles by 2015.

A Toyota China spokesman was not reachable on Monday.

Despite most Japanese auto makers reporting a more than 50 percent recovery in sales last month from October, mainly due to the Guangzhou auto show and heavy sales promotions, analysts still say it will be hard for them to rebound to previous levels of production.

Cui Dongshu, deputy secretary-general of China Passenger Car Association, said he believed Japanese auto sales would be "lucky to reach 90 percent of the level of sales" normally expected in January.

Namrita Chow, a senior analyst with consulting form IHS Automotive, said that the severity of the ongoing Diaoyu Islands issue would threaten Japanese brand vehicle production in China for at least a year.

Chow added: "Despite dealers offering strong discounts, the overall sales of Japanese brands in China did not fare well in October, with Japanese manufacturers announcing they planned cutbacks in vehicle production in China in 2013 and possibly into 2014."

Chow estimated that lost production was likely to hit 350,000 units in 2013 and 300,000 units in 2014.

Toyota reported new car sales of 63,800 units in China in November, a 39.9 percent improvement on October, but still a 22.1 percent year-on-year decline.

The October figures were down 44.1 percent year-on-year, after a 48.9 percent dive in September.

Mazda Motor Corp said that its market performance dropped 29.7 percent from a year earlier to 12,187 units in November, but that had rebounded from a 45 percent fall in October.

Honda Motor Co, meanwhile, sold 41,205 cars to Chinese customers in the month - a 70.9 percent rise on the previous month, but still a drop of 29.2 percent over November 2011.

The China Association of Automobile Manufacturers said on Monday that China's November automobile sales increased 8.2 percent from 2011 to 1.79 million units, which represented a 4 percent rise for the first 11 months to 17.49 million units year-on-year.

Though the Japanese brands started to recover in November from sluggish sales in the previous two months, their combined sales still dived 36.1 percent from a year earlier, said the association.