Analysts say Toyota has maintained a relatively stable foothold even amid the turbulent shift to electric vehicles in China. Despite deepening diplomatic tensions between Japan and China, Toyota is seen as having shown a strategy of survival and adaptation in the Chinese market by minimizing declines compared with rivals.
According to Bloomberg on the 12th, Toyota's shipments in China last year fell 14% from the 2022 record high, but the shock was limited compared with Ford's plunge of more than 80% and Volkswagen's one-third drop. China's auto industry hit a turning point in 2020 as electric vehicles surged, pushing out many foreign brands centered on internal combustion engines, but Toyota showed an exceptional trend.
The core reason Toyota was able to hold out is cited as its hybrid strategy that began in 1997. A hybrid lineup that started with the Prius expanded to the Corolla, Camry and Highlander, aligning with China's carbon neutrality and energy-saving trend. Analysts say this is why Toyota avoided being "completely left behind" even as the transition to electric vehicles accelerated.
Even as China-Japan tensions continue, the near absence of a boycott of Japanese products in China is also working in Toyota's favor. Unlike during the 2012 sovereignty dispute, Chinese authorities are showing caution to avoid market instability. Market research firms expect Toyota's China revenue to rise 14% this year, and despite short-term risks, there is an outlook that Toyota is likely to weather another crisis in the Chinese market.
Toyota has recently been recalibrating its strategy. While it had continued joint production with FAW and Guangzhou Automobile, it has now shifted toward a "deepened localization strategy" that actively adopts Chinese technology. As a result, the fully electric sport utility vehicle (SUV) bZ3x, launched in March, was priced in the 100,000-yuan range (about 20 million won), taking on BYD's low-priced EVs. The model sold more than 50,000 units through October, gaining traction in the market at the fastest pace among Toyota EVs.
However, intensifying localization carries risks. The more it relies on Chinese technology, the more the brand identity could be diluted, raising concerns that consumers may "not feel a particular reason to buy Toyota." Experts say how Toyota balances technology and brand will be a decisive factor for its future market position.
Profitability has also deteriorated. According to analysis by research firm Pelham Smithers, Toyota's revenue, including its Chinese joint ventures and domestic Japanese exports, fell to nearly half within three years from 525 billion yen (about 5 trillion won) in 2021. As Toyota carried out large-scale discount sales starting in 2023, shipments increased, but it appears the company could not avoid a decline in profits.
Standing at a crossroads for growth, Toyota plans to strengthen medium- to long-term investment in China. Following Tesla, it will establish its own plant in Shanghai and begin local assembly of Lexus from 2027, targeting annual production of 100,000 units.