China looks set to reject the proposal for a joint venture between Fuji Heavy Industries, in which Toyota holds a 16.5% stake, and the country’s seventh largest carmaker, Chery Automobile Co.
According to state sources cited by Bloomberg news, the reason is that this would give Toyota a third joint venture in the country. This violates current regulations stipulating that any overseas company can form only two joint ventures in the passenger car manufacturing field.
The same sources, who wouldn’t be identified because of the sensitive nature of the issue, claim that the Chinese government considers Fuji Heavy Industries, the owner (among others) of Subaru, a part of Toyota. The latter already has joint ventures with China FAW Group Corp. and Guangzhou Automobile Group Co. in the country, but if the plan is rejected, it will hamper Fuji Heavy Industries’ goal of 180,000 sales in China and increasing its global production to 900,000 units by 2015.
Perhaps this isn’t just a matter of interpreting regulations. Maybe it has also something to do with the Chinese authorities’ intention to limit local car production and slow its rapid expansion while at the same time pushing for the development of “green” technologies.
Shanghai-based CSC International Holdings analyst Han W`eiqi agrees with this view: “The government is concerned about overcapacity of the auto industry and has focused on slowing down automakers’ expansion pace. A venture between Subaru and Chery wouldn’t likely contribute much in terms of volume or improvements to the industry.”
Both Toyota and Fuji Heavy Industries spokesmen commented that they were unaware of any decision on that matter.
