Insiders Say Toyota Will Build Lexus Vehicles In China, Company Dismisses Reports

Toyota is considering building its Lexus vehicles in China in a bid to ignite sales growth and make its vehicles more competitive to the German three.

According to four unnamed company insiders, Toyota has been researching Chinese production of Lexus models for the last two years. This comes despite previous reluctance from the automaker to build vehicles in China over quality and profitability concerns.

Reuters reports that Toyota discussed the matter with Chinese joint-venture partners Guangzhou Automobile Group Co and FAW Group last year.

In recent years, the Chinese have proven themselves to be capable of producing high-quality vehicles. This, combined with the new government policy that will allow foreign car manufacturers to own or control a majority stake in their China operations, are thought to be among the key reasons why Toyota is seriously considering local production for its premium Lexus brand.

China intends on scrapping foreign ownership restrictions in the auto industry, meaning overseas carmakers will no longer need to form a joint-venture with a Chinese firm to build their vehicles locally. As it stands, Toyota also builds the Camry, Highlander, Corolla, Levin and Crown in China with local partners.

The aforementioned insiders claim that “all the preparation has been more or less completed” and that Toyota is simply waiting for a “go from management” to pull the trigger.

Not everyone from Toyota is keen on the idea, however. Opponents pinpoint the fact that there is a Lexus plant on the Japanese island of Kyushu, just two days from Shanghai by sea. Additionally, China recently lowered tariffs on imported passengers cars from 25 per cent in July to 15 per cent.

“We always weigh the need for localizing production as part of the consideration for the Lexus brand’s future in China,” a Toyota spokesman said.

“But at this point in time, we don’t have any specific plans for producing Lexus cars in China.”