Toyota’s premium pricing in China is down the pan

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From Businessweek:

Drivers in China are no longer in a hurry to own Toyota Motor Corp.’s cars.

Neil Hu, a sales manager at a Toyota dealership in Beijing, said he has stopped charging a 5,000 yuan ($732) premium to customers who want to skip the waiting list for RAV4 sport- utility vehicles. He took the initiative after the Japanese carmaker recalled 75,552 of the SUVs in China last month to fix gas pedals that may stick.

“I heard the situation in the U.S. is pretty bad for Toyota,” Hu said. “The recall has impacted us as well.”

Toyota, which grew more slowly than competitors in China in 2009, will likely lose more market share and see a decline in local profit margin this year, analysts say. The carmaker has relied on a reputation for quality and safety to sell high margin, mid- to large-size models even as the world’s biggest auto market shifts to cheaper, smaller cars, encouraged by government incentives.

With Toyota’s brand damaged by global recalls of millions of vehicles, profit margins for its SUVs and Camry and Crown sedans may shrink, said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia Ltd., an industry consultant.

“With this recall saga, Toyota’s premium pricing power in China is gone,” Chotai said. “Toyota’s cars don’t have enough good value for money.”

However, its not all bad for Toyota, they did see a 30% rise in sales:

The company’s February China sales rose 30 percent to 45,400 vehicles, underperforming the overall passenger-car market’s 55 percent surge.

The bad news is that China is about to begin an investigation into Toyota’s recall in China. The recall was announced in late January but cars did not repaired until the end of February, leaving many Toyota drivers rather unhappy.

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4 Comments

  • Ed
    March 18, 2010

    Surprise, surprise. Toyota… what can I say. China better hit them hard.

  • Head Honcho
    March 18, 2010

    And then maybe China will finally get a hint at demanding better cars from the domestic brands too and the Chinese cars can evolve into something worth driving.

  • woxihuanpijiu
    March 19, 2010

    It’s possible they weren’t repaired immediately due to the fact Toyota has recalled millions of cars worldwide. Being a JIT pioneer it is very unlikely they have enough parts just lying around for that many vehicles. If those parts were being made for Toyota then chances are that factory is already pretty busy and may have had to adjust production schedules for the extra demand.

    After the Sichuan earthquake a few years back the Chinese government had to start procuring “made in China” tents from around the world because they couldn’t source enough locally (they seized the factories)… When the s#$t hits the fan then a bit of leeway can should be given.

    It could also have taken a month to get the message through to consumers and arrange a full recall schedule around regular maintenance schedules as some repairs could be performed at the same time.

    If someone else has a better idea to pull a few million parts out of there @ss in a week then feel free to let one rip ;)

  • CCT
    March 19, 2010

    The biggest reason for a slow repair time was probably due to the holidays when most of the repair workers went off home, as did the customers in their RAV4′s.

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