Toyota sets tough China sales goal of 1.4 million vehicles for 2018

BEIJING (Reuters) - Toyota Motor Corp 7203.T aims to sell 1.4 million vehicles in China in 2018, nearly 9 percent more than it sold last year, but two insiders at the Japanese automaker said production constraints and other hurdles make it a tough target to meet.

FILE PHOTO: Visitors look at Toyota models at Auto Guangzhou in Guangzhou, China November 17, 2017. REUTERS/Bobby Yip/File Photo

The sales goal announced by Japan’s biggest automaker on Friday comes at a time when the world’s biggest auto market is experiencing a slowdown in overall vehicle sales growth.

The two people said the target is more a “stretch goal.” It is a target that is not the baseline sales forecast and one that executives acknowledge will be difficult to achieve, they said. They declined to be identified as they were not authorised to speak to the Reuters reporter.

A big factor that makes selling 1.4 million vehicles this year more of a challenge is Toyota’s manufacturing capacity which the two individuals said remains strained.

“If we could resolve this capacity issue, it would be easy to make the 1.4 million target. With sufficient capacity, we can possibly sell 1.5 million vehicles,” one of the two people said.

Toyota’s forecast for 2018 is relatively more upbeat than the previous few years in part because it expects to launch a couple of potentially high-volume subcompact sport-utility vehicles (SUVs) later this year, the people said.

They said Toyota plans to launch two China-market versions of the subcompact Toyota CH-R crossover SUV in a June-July time frame. The CH-R hit showrooms in the United States in April last year.

Those two CH-R variants are smallish crossover SUVs that others, most notably Japan’s Honda Motor Co 7267.T, have leveraged to grow sales significantly in China.

A Toyota spokesman said that though the 2018 sales target was not one that can be easily achieved due to the highly competitive market environment, the recent launch of a redesigned Camry sedan and the planned introduction of two subcompact SUVs later this year would enable Toyota to challenge the previous year’s numbers.

China’s overall vehicle market growth was the weakest last year in at least two decades, increasing just 3 percent year-on-year to 28.88 million vehicles, pegged back chiefly by a phasing out of tax breaks on smaller-engine cars that begun in 2017.

According to data from the China Association of Automobile Manufacturers (CAAM), 2018 will another weak year. It predicts the country’s vehicle market will grow 3.5 percent in 2018.

On Friday, Toyota said its sales in China in January rose 24.5 percent from a year earlier to 127,500 vehicles. Smaller rival Honda’s sales in China, meanwhile, rose 10.9 percent in January to 126,174 vehicles.

Honda, which last year sold a total of 1.44 million vehicles in China, did not provide a forecast for volumes for this year.

Reporting by Norihiko Shirouzu; Editing by Muralikumar Anantharaman