As a matter of fact, in the 20 years since entering the Chinese market, Lexus has heard the news of localization more than once, and even the authorities have made two bets on when to localize, but they have failed to make it.
Recently, the news of the localization of Lexus has been reported again.
What is different is that the previous localization of Lexus is because sales are too good, but this time, the industry analysis is to transform new energy and stimulate sales.
Recently, Toyota Chairman Akio Toyoda, 68, performed a difficult drift show on the track and announced that GR Yaris would be introduced to China at Toyota’s GR Carnival in Shanghai.
Accompanied by rumors of the localization of Lexus.
Toyota is discussing with authorities in Shanghai the possibility of building a wholly owned plant there to produce Lexus cars, the automaker has learned.
In this regard, Toyota said it would not comment on the rumors.
Toyota hopes to have similar treatment to Tesla’s Shanghai plant, including tax breaks, policy support and land subsidies, and the new plant will focus on pure electric models, according to people familiar with the matter.
The above news is also believed by the industry that Lexus is going to be made in China.
Photo source: Lexus, why is it so slow to make Lexus? The localization of Lexus seems to be a never-ending mystery.
In 2004, Lexus officially entered the Chinese market, and then first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen established independent Lexus franchises.
In the following years, the sales of Lexus in the Chinese market have been on the rise, and the issue of localization has been repeatedly mentioned.
Zeng Lintang, then general manager of Lexus China, said: “when sales reach 30,000 vehicles that year, you can consider domestic production.
” Since then, Zeng Lintang made another bet: “from an economic point of view, only when the annual sales of one model reaches 30,000 to 40,000 units can the issue of localization be considered.
” Later, Yuan Zhongrong, then deputy general manager of Toyota in Guangzhou, also said, “when the annual sales of Lexus reach 50,000 vehicles, consider making China.
” In 2012, Lexus raised its bet again to 100000 units, believing that when annual sales reached 100000 units, it would consider making China.
Although the above bets were later realized, the bet on the localization of Rexa has been broken.
In 2013, just as Nissan Infiniti and Honda eulogized the establishment of a joint venture, Hiroshi Oishi, then general manager of Toyota China, also publicly expressed his intention to start producing Lexus in China at that year’s Shanghai auto show.
I thought it was a sure thing, but it didn’t work out in the end.
Source: Lexus, industry analysts at that time, first, because Toyota was unwilling to share profits with joint ventures, and second, because Lexus had skilled workers in Japan, using the production and parts supply platform shared with Toyota, to minimize costs.
Third, China has to face the choice of joint ventures between the north and the south.
In addition, some analysts say that the failure of Infiniti and Acura’s localization has dashed the intention of Lexus localization.
In 2018, FAW officially mentioned that it would introduce Lexus luxury brand.
However, this has also become the self-exuberance of FAW.
Lexus (China) issued an official response that “there is no specific time for Lexus to be localized”.
It can also be seen that Lexus is entangled with localization.
However, with the loosening of the joint venture stock ratio, the localization of Lexus ushered in a turnaround.
Since January 2022, the restriction on foreign equity ratio in passenger car manufacturing has been lifted in China’s automobile manufacturing sector.
On June 24 this year, Xin Guobin, Vice Minister of Industry and Information Technology, said that the Ministry of Industry and Information Technology has fully implemented the high-level policy of opening up to the outside world and strongly supported the development of multinational corporations in China.
The Ministry of Industry and Information Technology is promoting the implementation of measures to completely abolish restrictions on foreign investment in the manufacturing industry.
With a more open business environment, Lexus does not have to worry about it, while localization seems to be just a step in the door.
However, a person familiar with the matter said that the Shanghai authorities are willing to attract more foreign investment, but may need higher-level approval, which means that the negotiations between the two sides are far from complete and may even change.
It is difficult for Toyota to build a wholly-owned factory in China because at the policy level, it is very strict to control the production capacity of the factory and cannot build the plant in disorder.
Therefore, whether it can be made in the end depends on whether its subsequent production capacity can be effectively guaranteed and whether it can reach a certain scale.
” Cui Dongshu, secretary-general of the Federation of passengers, commented on this.
At present, it is not as good as in the past, from annual sales of 30, 000 units, to annual sales of 30, 000 bicycles, to 50, 000 bicycles, and finally to 100000.
We can see that the premise of localization has been reported many times in the past.
it’s mostly because Lexus sales continue to rise.
This time, however, Lexus’s background in China is not good.
Data show that Lexus sales in China exceeded 100000 vehicles for the first time in 2016, reaching 109200 vehicles.
Four years later (2021), Lexus sales in China successfully doubled to 227000 vehicles.
This is also the peak of Lexus.
In 2022, however, cumulative Lexus sales plummeted, falling 24.
5% from a year earlier, ending hastily with cumulative sales of 176000 vehicles.
It increased slightly by 3% to 181400 in 2023.
Lexus, by contrast, is seeing a big increase in global sales.
In 2023, Lexus sold a total of 824000 new cars worldwide, an increase of 32% over the same period last year.
North America was the largest market, selling 355000, up 24% from the same period last year.
the Japanese market sold 94000, an increase of 129% over the same period last year.
Europe and the Middle East also grew by 46% and 60%, respectively.
China’s global share of Lexus fell from 28 per cent to 22 per cent.
In the first five months of this year, Lexus’s cumulative sales in China rose 28% year-on-year to 69000 vehicles, but this seemingly glamorous sales are also the result of price cuts and profits.
You know, Lexus used to be known as the king of value preservation and price increase.
The price increase of its best-selling model ES is 20, 000 yuan, and the LM model even needs a price increase of 800000.
Later, despite the huge fines imposed by the government, Lexus still did not stop the price increase.
Lexus also made a lot of money in China, which is one of the reasons why Lexus has been slow to make domestic products.
Now, not only have there been no price increases for all Lexus models, but even most models have reduced prices.
For example, the main selling models ES, NX have a terminal discount of about 50, 000 yuan.
According to news, some areas have even offered a price reduction of 100000 yuan, and such a big discount is rare for Lexus.
If you need new energy, you need to be localized.
In fact,Second-tier luxury brands, including Lexus, have without exception reduced prices and made profits, and sales have fallen.
The main reason is the slow transformation of new energy.
How to save sales and accelerate the transformation of new energy is a hurdle that Lexus cannot circumvent.
In fact, as early as 2021, Toyota officials planned that by 2030, the Lexus and Toyota brands will sell 3.
5 million pure electric vehicles worldwide.
Lexus is the vanguard of Toyota’s transformation into new energy.
It is expected to be the first to achieve 100% pure electric vehicles in China, North America and Europe in 2030, with global annual sales reaching 1 million.
in 2035, it will achieve pure electric vehicles globally.
To this end, at this year’s Tokyo Auto Show, Lexus released the Lexus LF-ZC concept model and said that it will start the transformation stage of the brand entering electrification in 2026.
However, the transformation of new energy is naturally inseparable from the Chinese market.
Relying on its Shanghai factory, Tesla has rapidly grown into the world’s leading new energy vehicle company.
Foreign-funded companies such as Volkswagen and General Motors have also accelerated the pace of transformation of new energy in China.
, Toyota Motor President Tsuharu Sato once said,”In the process of Lexus electrification transformation, the Chinese market will play a very important role.
” Therefore, the industry believes that whether it is to maintain sales in China or transform new energy, the localization of Lexus will greatly help it.
Photo source: Lexus, today, China has developed into the world’s largest new energy vehicle market with a mature supply chain system.
If Lexus is not localized, it will inevitably bear greater cost pressure, which will in turn affect the competitiveness of its products.
Take Volkswagen as an example.
The domestic price of Volkswagen ID.
3 is only 125,900 yuan (about 16,000 euros).
In the German market, Volkswagen ID.
3 starts selling for about 40,000 euros (about 320,000 yuan).
The price difference of 200,000 yuan even caused dissatisfaction among German consumers.
, From this point of view, if Toyota wants to use Lexus as a vanguard in entering new energy, localization seems to be a must-have move.
Cui Dongshu believes: “For the Lexus brand, if domestic production is successful, it can bring more consumer confidence, further enhance competitiveness, and promote industrial integration.
Because on a global scale, the new energy vehicle industry chain in the Chinese market is the strongest, Lexus electric vehicles will definitely have more advantages than producing them in Japan.
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