China Deathwatch Update: Going Beyond the Protests, Did Toyota Miss the Mark?

Unless you’ve been living in a cave, or worse, not had access to the Internet because of Superstorm Sandy (we here at TDWUS would like to express our condolences for those that have lost loved ones in this unfortunate incident), then you’re well aware of what’s been transpiring over in China. If not, then click here to read all about it.

Now, while the month-over-month, as well as the year-over-year total vehicle sales like the Toyota Crown have taken a nosedive to the tune of about 50 percent…did the decline really start a lot sooner than that?

It very well could have been…Toyota, like any other major automaker, has been jockeying for position in what is the world’s largest automotive market…China. I put China as number one, and India (once they get their infrastructure updated to modern-day standards) as number two, followed by the United States as number three. Why will the US fall from grace? Simple…because the younger generations could care less about cars in general. They are more concerned with their smartphones, and being able to connect with people. As for right now, cars are still a necessity, and will continue to be that way, but the enthusiasm for them is definitely waning, as our culture has evolved into that of a digital one.

So, that leaves China and India as the future top dogs…and in China especially, you have to partner up with a local auto company in order to sell your vehicles there. Eventually, they’ll steal all of your intellectual property and come out with horrible knockoffs, but that’s another article for another time.

Needing to capture the entry-level market in China is as important as coming out with long-wheelbase versions of their higher end models such as the Toyota Crown. Toyota was well aware of this once they launched the Toyota Yaris in China back in 2008. Unfortunately for them, they missed both their sales target for the vehicle, as well as China’s main buyer demographic…the budget-conscious Chinese middle-class. It appears that they did the same thing here in the United States.

So, where did they go wrong?

For starters, they picked a car that is terrible. The Yaris has generally been panned by critics and the general public as being too tinny, cramped on the inside, and “unsafe” to drive. I put that in quotations because people have told me that they don’t feel safe driving it. Yes Harvey, I know that you absolutely love the car, because it’s a lot like Phoebe, but you’re an anomaly, and Chinese car buyers don’t think like you do. So get over it.

Anyways, in addition to being what my old boss at Ford would describe the car as a “pregnant rollerskate”, it’s also overpriced versus its main competition, the Chevy Sail. Coming in at 87,000 yuan, which converts to roughly $13,900 USD, it’s 55 percent more than the Sail. This of course, puts it at a severe disadvantage. No amount of “cash on the hood” could ever put it within striking distance of this or it’s other competitor, the Nissan Tiida. You may know it as the Nissan Versa, of which the 5-door hatchback is still being sold here in the States. A near-luxury car (in Japan) will beat out the Yaris every single time.

To top off all of what’s going against the Yaris, monthly sales of the little Toyota haven’t climbed past 1,250 units. By comparison, Nissan moves 12,000 Tiidas, and GM sells over 17,000 of the Sail every month. Talk about a lot of sailing past the competition…and this was before the anti-Japan protests over the Land of the Rising Sun trying to take the East China Sea Islands away from China.

In addition, Toyota feels that the answer to righting the ship from sinking like the Titanic is to import more employees from Japan, whereas most analysts feel that the exact opposite approach should be taken…hire more local designers and engineers to create a new, proper subcompact to appease the (always fickle) car-buying public. They have shown off a concept car that is scheduled to debut in saloon form next year, with a hatchback to follow a few months later (just in time for the holiday season…what a crappy gift to give and/or get). Although Toyota is being optimistic, it will be tough to overthrow the heavyweights…it is similar to what’s going on here in America, with numerous car companies trying to dethrone the almighty Toyota Camry.

Will Toyota ever prevail in the lower end of the market? Or for that matter, can they turn back the accelerating decrease in sales across the board? Like the group Nelson said, only time will tell…

 

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