Tags: Auto Industry, China, Mike Caggeso

With New R&D and Auto Plants Planned, Toyota Revs up its Rivalry with General Motors in China

By , Money Morning •

By Mike Caggeso
Associate Editor

After a year in which Toyota Motor Corp. (TM) saw its stock drop 21.5% and its rivalry with General Motors Corp. (GM) intensify, the Japan-based carmaker is trying to recapture its momentum by investing heavily in China.

BizChina reported that Toyota plans to set up a new automobile plant in China's Jilin province - its eighth production plant in the country. Operations are expected to start in 2010, and the plant's production could be as high as 100,000 vehicles a year.

BizChina also reported that Toyota is opening its first research-and-development center in China next year. Based near Shanghai, it will develop and test drive models specifically for Chinese consumers.

Toyota may also add more R&D sites in Tianjin [China's third largest urban area near Beijing] and Guangzhou [China's third-largest metropolitan area about 75 miles north of Hong Kong]

Toyota's aggressive steps are aimed at getting a better footing in China's exploding automotive market, the next primary battleground for the global automotive industry - especially since the Detroit-based GM barely retained its title as world's No. 1 automaker in 2007, selling a mere 3,000 more vehicles than Toyota [GM sold 9,369 million vehicles; Toyota sold 9.366 million].

On Monday, Toyota posted a 7.5% increase in profits for its fiscal third quarter, ended Dec. 31. Even more telling: Toyota's quarterly sales advanced 5.3%. while GM's grew 4.8%.

GM's China strategy is very different than Toyota's. The U.S. carmaker - which controls such key brands as Chevrolet, Buick, Pontiac and Saturn - operates seven joint ventures in China, allowing the company to diffuse risk and save money on labor and production costs.

However, GM's 18.5% sales growth in China last year was its slowest in that market five years, Forbes reported, prompting the company to seek a larger share in a joint venture with Shanghai Automotive and Liuzhou Wuling Automotive Co., which was formed in 2002. 

GM also plans to introduce several models in China this year.

News and Related Story Links:

  • BizChina:
    Toyota to build new China plant
  • BizChina:
    Toyota opens first China R&D center
  • Forbes:
    GM Wants Bigger Piece Of China Joint Venture