Toyota aims to sell 1.1m vehicles in China despite slowing growth

Toyota Motor Corp expects its pace of growth in China to almost halve in 2015 after failing to meet last year's target and as dealers demand compensation to atone for lackluster sales.

Japan's top carmaker said on Tuesday it sold about 1.03 million vehicles in China in 2014, up 12.5 percent from the previous year but short of its sales target of more than 1.1 million.

In 2015, the carmaker aims to sell 1.1 million vehicles in the country, representing a growth of 6.8 percent.

Japanese carmakers in China faced the twin challenges of a slowing economy and flares of political tension between China and Japan over the last year. Growth in China's auto market, the world's biggest, halved to around 7 percent in 2014.

But unlike rivals Honda Motor Co Ltd and Nissan Motor Co Ltd, Toyota chose not to trim its China sales target.

Some Toyota dealers complain that they were forced to buy stock from the carmaker due to unrealistic sales goals, resulting in bloated inventories and heavy losses.

On December 26, the China Automobile Dealers Association (CADA), representing more than 500 Toyota dealers, submitted a letter to Toyota's joint venture with China FAW Group Co, demanding 2.2 billion yuan ($354.14 million) in subsidies and more realistic sales targets.

Song Tao, CADA's deputy secretary-general, told Reuters that FAW-Toyota agreed to negotiate with the dealers through a dealers' council.

Toyota declined comment.

The Jiangsu Automobile Trade Management Association, which represents dealers in East China's Jiangsu Province, has repeatedly complained to FAW-Toyota about its sales practices.

The body said that 30 of 34 FAW Toyota dealerships in Jiangsu were losing money, partly because they were obliged to buy a set number of cars from FAW Toyota or face penalty fees.

But with Chinese dealers becoming more vocal and united in their dispute with manufacturers over who should bear the brunt of the market slowdown, there are signs that the balance of power could be shifting.

BMW has agreed to pay 5.1 billion yuan in subsidies to its dealers in China, CADA said on Monday.