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Toyota reportedly planning to make Lexus cars in China

Toyota Motor Corp plans to set up a dealership network in China by the end of this year for its Lexus luxury vehicles, focusing on the growing number of high-income earners there, a leading Japanese financial daily reported yesterday.

According to the Nihon Kei-zai Shimbun, the dealerships will provide repair and other services in cities such as Beijing, Shanghai and Guangzhou, where household incomes are rising.

The firm will sign a franchise contract with dealers and plans to expand the Lexus network through the franchise system, mostly in major cities next year and beyond.

Toyota is competing in thhe Chinese luxury car market with BMW and DaimlerChrysler. BMW has already started local production of its models while DaimlerChrysler plans to manufacturer Mercedes-Benz models in Beijing next spring.

In the Chinese market, car sales surged 35.6 percent on the year to 4.57 million units last year. But the price war for subcompacts is intensifying, shrinking automakers' profit margins.

This has prompted Toyota to branch into the luxury car business, which is expected to offer stable earnings in meeting the needs of the growing high income population, the report said.

A Toyota spokeswoman in Tokyo declined to comment on the report.

According to the report, the Chinese Lexus dealers are expected to sell four models, including the LS430 and GS300. The vehicles will be shipped from Japan and distributed to the dealers through Toyota Motor (China) Ltd. The annual sales target is estimated between several thousand to 10,000 vehicles, the report said.

Toyota already manufacturers and markets the Vios and the Corolla subcompact in China.
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