Toyota's Strategic Scale-Back! Lowers Output At Chinese JV To Navigate Challenging Market: Report

Toyota Motor Corporation TM has reportedly told dealers that it will extend a program to lower output at one of its joint ventures in China, where it encounters rising competition.

Hence, the number of vehicles sold to Toyota dealers is slated to fall to 66,000 units in December, 60,000 in January, and 38,000 in February, Reuters reported, citing a letter that has been verified with one of the dealers.

The reduction, initially set for October and November, will continue for an additional three months, according to a letter dated November 3 from Toyota's joint venture with China's state-owned FAW Group.

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The goal is to mitigate the burden of inventory on dealers and ensure they can function effectively in the tough market landscape.

"Production from December to February next year will continue to be reduced by a large amount," FAW Toyota said, as noted by Reuters.

In July, due to production volumes, Toyota also ended the contracts of approximately 1,000 temporary workers prematurely at its joint venture with Guangzhou Automobile Group Co., Ltd. GNZUF.

"Every time we faced the danger of being unable to make cars, everyone worked together to restore or adapt production," said President of Toyota Koji Sato in a statement yesterday, where the company revealed that it has reached a cumulative global production total of 300 million cars, including production numbers for September 2023.

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Toyota, coming in third after BYD Co., Ltd. BYDDF and Volkswagen AG VWAGY in the Chinese market, sold 1.265 million vehicles to dealerships in the first three quarters, according to data from the China Association of Automobile Manufacturers, noted by Reuters. This represents a 9% decrease from the same period last year, the Reuters report added.

Price Action: TM shares are trading lower by 1.02% to $187.72 on the last check Tuesday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.