Toyota Motor Corp., the largest Japanese company and the (interim) second largest automaker in the world, said recently it “can’t be optimistic” about having its Chinese operations profitable this year.

China, the world’s largest auto market, has recent forced the Japanese carmaker to lower prices and increase buying incentives offered to consumers to cope with competitors. All automakers in China are now bulking up to cope with sliding sales and profitability because of the country’s decaying economic growth and stock market rout. Toyota on Tuesday said its fiscal first-quarter net profit rose to a record for the third straight year and announced Chinese sales had advanced – still, the pricing wars have impacted profit, according to company executives. During the recently concluded quarter Chinese sales were negative each month as the economic surge has reached its slowest pace in two decades and a half, while consumer sentiment has also been diminished because of the stock market woes. “In April-June, vehicle sales have progressed firmly but as for profitability, we can’t be optimistic,” commented Managing Officer Tetsuya Otake.

Japanese automakers are forecasted to remain more competitive than global rivals on the Chinese market because of rising sales for their newer sport utility vehicles, though Toyota is worried that pricing competition is sapping profit from the popular RAV4 model as all carmakers seek to gain market share in the booming SUV sector. Global retail sales for Toyota fell 0.4 percent during the quarter to 2.5 million units, with the company saying the drop was triggered by Southeast Asia issues and dropping sales of mini cars in Japan.

Via Reuters


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