Toyota’s China joint venture reportedly extends production cut to ease high inventory pressure amid competition from booming EVs

By Greg Gao

(JW Insights) Nov 8 -- FAW Toyota, the Japanese giant’s China joint venture, is said to be informing its dealers that it will extend a plan to reduce output for December through February next year due to high inventory pressure, according to a recent document titled “Letter to FAW Toyota Dealership Partners” circulating online.

Following the substantial reduction in production in October and November, the planned output for FAW Toyota's December is set to decrease to 66,000 units, followed by a further reduction to 60,000 units in January 2024, and down to 38,000 units in next February.

These substantial adjustments aim to alleviate the inventory and financial pressures faced by the dealership partners, ensuring the health and sustainability of their operations, according to the letter to dealers.

While Toyota has avoided the kind of hit other Japanese automakers such as Nissan Motor and Honda Motor have taken in China from a shift to electric vehicles and the rise of domestic brands, it still faces pressure in the world’s biggest auto market.

Chinese rivals such as BYD have been gaining market share, with plug-in hybrids and pure electric cars at competitive prices, reported Reuters. 

FAW Toyota was established in 2003 as a joint venture between Toyota Motor Company and First Automobile Works(FAW). It operates three vehicle manufacturing bases, two engine production facilities, one research and development center, one sales company, and one logistics company. 

The company’s eleven functional departments are distributed across four locations: northern China's Tianjin, Chengdu of southeastern China’s Sichuan Province, Changchun, of northeastern China’s Jilin Province, and Beijing. FAW Toyota’s product lineup includes models such as Vios, Corolla, Allion, Corolla Cross, Crown Kluger, and Granvia.