In the wave of transformation in the automotive industry, every strategic adjustment of traditional car companies affects the sensitive nerves of the market. On October 23rd, Toyota China held a media briefing to officially respond to the recent rumors of "North South Toyota grid connected sales", revealing the true face of this strategic adjustment. Many reports describe Toyota's current measures as a dead end move, which is actually a big misunderstanding, "said the person in charge of Toyota China. It is reported that the so-called "grid connected sales" is actually a small-scale pilot project of Toyota in terminal channels, mainly targeting low tier city areas with only one Toyota dealership.

Due to their limited scale, these 'single city, single store' markets often struggle to support the independent sales networks of two joint venture companies. Toyota has authorized these stores to simultaneously sell the full range of models from GAC Toyota and FAW Toyota through this pilot program, aiming to provide consumers with richer choices and more convenient service experiences. The pilot project was launched in July and August this year and is currently only being tested in about 10 cities. We are only optimizing the pilot channels in some low tier cities, rather than promoting channel consolidation across the entire region. The person in charge emphasized that Toyota will not forcefully push for consolidation regardless of the actual situation of dealers.

The inevitable choice for dealers under the pressure of profit in the market reality

By analyzing market data in depth, we can better understand the background of Toyota's adjustment. From January to August this year, the joint venture between FAW Toyota and GAC Toyota sold approximately 980000 vehicles and had a dealer network of around 1400. This means that the average sales volume of a single store is only 700 vehicles, and the monthly average sales performance of 87.5 vehicles is indeed difficult to guarantee the reasonable profit of dealers in the current fierce market competition environment.

With the intensification of market competition and the increasing cost of electric vehicle transformation, the operating pressure of traditional 4S stores is becoming increasingly prominent. The monthly sales volume of a single store is below 100 vehicles, making it difficult to cover the high operating costs, which also makes channel optimization a common issue faced by the industry. From an industry perspective, this optimization trend is not unique to Toyota. Previously, Ford China had taken the lead in channel integration by merging the passenger car sales businesses of Changan Ford and Jiangling Ford. Similarly, Geely's Lynk&Co and Jike have also achieved channel resource sharing. These cases provide industry references for Toyota's pilot program.

In addition to the adjustment of sales channels, Toyota's "twin model" strategy in China has also received much attention. This strategy refers to the combination of two models developed on the same platform, such as the FAW Toyota Corolla and GAC Toyota Corolla, and the Asia Dragon and Camry. In January of this year, there were media reports that Toyota planned to optimize its twin model strategy, possibly merging some models to reduce internal competition and resource waste. Although this news has been officially denied, from the perspective of industry development trends, this optimization does have its rationality. During the critical period of electric vehicle transformation, concentrating resources on developing more competitive products and avoiding internal friction among similar models has become a common choice for many car companies. As a global automotive giant, Toyota naturally needs to adjust its product strategy in a timely manner according to market changes.

Lexus' New Energy Challenge in Transforming into a Luxury Brand

In Toyota China's overall strategy, the transformation of the Lexus brand is also worth paying attention to. On October 17th of this year, Lexus officially opened its office building in Jinshan, Shanghai, with about 80 employees settling in to undertake functions such as research and development, production, and sales.

As Toyota's second wholly-owned new energy vehicle company in China, Lexus is steadily advancing its localization process. Its new energy project started construction in Jinshan, Shanghai in June this year, and is expected to be completed in August 2026 and officially put into operation in 2027. This layout demonstrates Toyota's high regard for the Chinese market.

However, Lexus faces challenges in the process of electrification transformation. The exterior design change of the all-new ES model has sparked market discussions. How to make consumers understand and accept the design concepts of the new generation on the basis of the successful design of the previous generation is a major challenge we face in marketing, "said the head of Toyota China. Data shows that Lexus imported car sales reached 15300 units in August this year, with the ES model contributing 10200 units. Although Lexus is currently the only luxury brand to maintain positive growth, the pressure cannot be underestimated in the face of fierce competition in the new energy vehicle market.

Breakthrough in product layout in the field of new energy

In terms of overall market performance, Toyota sold 837700 vehicles in the Chinese market (including Lexus) in the first half of this year, a year-on-year increase of 6.8%. In September, FAW Toyota sold 71031 vehicles and GAC Toyota sold 71220 vehicles, showing relatively stable performance.

It is worth noting that Toyota has made significant breakthroughs in the field of new energy. The Platinum 3X launched by GAC Toyota has become a popular model among joint venture brands, with orders exceeding 10000 units within one hour of its launch in March this year. The model starts at 109800 yuan and has successfully opened up the market through a combination strategy of "advanced intelligent driving assistance, superior space design, and ultimate safety performance". At the same time, FAW Toyota's bZ series is gradually gaining momentum, with the bZ5 model selling 3019 units in September, showing a rapid upward trend. These achievements indicate that Toyota is finding a development path suitable for the Chinese market in the transition to new energy.

Localization strategy deeply reconstructs industrial logic

Since announcing the two major policies of "inheritance and evolution" and "business centered on products and regions" in 2023, Toyota has begun to comprehensively restructure its industrial logic in the Chinese market. This round of localization reform involves multiple levels such as research and development, management, sales, service, and even organizational authority.

On the basis of integrating diverse resources such as FAW Toyota, GAC Toyota, BYD Toyota, etc., Toyota has unprecedentedly shifted its R&D leadership to the China region, establishing a ONE R&D system led by local talents and cross company collaboration, as well as a Chief Engineer (RCE) system in China. The promotion of this deep localization strategy reflects Toyota's understanding of the uniqueness of the Chinese market. It is reported that Lexus will also use local suppliers in China in the future, including core components such as batteries and cockpits. This measure not only helps to reduce costs, but also better meets the needs of Chinese consumers.

In conclusion

Looking ahead, Toyota plans to launch a series of new products at important events such as the Tokyo Auto Show and Guangzhou Auto Show. According to Japanese media reports, Toyota will release heavyweight models such as the all-new Land Cruiser FJ and the new Corolla, as well as high-end products such as the Century coupe SUV and Lexus LS six wheel concept car. However, Toyota still faces many challenges in the Chinese market. On the one hand, the competition in the new energy vehicle market is becoming increasingly fierce, and independent brands have made significant progress in both technology and market; On the other hand, consumer demands are becoming increasingly diversified, placing higher demands on product personalization and intelligence.

Toyota's channel optimization pilot reflects the strategic adjustment ideas of traditional car companies in the new era. By taking small steps and continuously optimizing, we can maintain strategic flexibility while controlling reform risks. This robust transformation strategy may be the key to Toyota's long-term ability to maintain its leading position in the industry. With the continuous maturity of the Chinese automotive market and the upgrading of consumer demand, it is worth our continued attention to how Toyota's localization strategy and channel optimization measures will affect its market performance. In the tide of electrification and intelligence, every turn of traditional giants may trigger profound changes in the industry landscape.