Lexus Sales in China Increase by 22% in 2017

[Joaquin Ruhi]

The only issue I've encountered (which other reviewers have also noticed) is an odd smell inside....not the typical new-car smell by any means.

I've read in more than one article that Chinese new car buyers passionately dislike the "typical/American" new car smell. I guess localized Chinese manufacturing takes some sort of measures (different adhesives, perhaps?) to avoid the new car smell we love and they hate.

 

[ssun30]

I've read in more than one article that Chinese new car buyers passionately dislike the "typical/American" new car smell. I guess localized Chinese manufacturing takes some sort of measures (different adhesives, perhaps?) to avoid the new car smell we love and they hate.

This I can confirm, very true.

 

[mmcartalk]

I've read in more than one article that Chinese new car buyers passionately dislike the "typical/American" new car smell. I guess localized Chinese manufacturing takes some sort of measures (different adhesives, perhaps?) to avoid the new car smell we love and they hate.

Fine, but the Envision, in that plant, is built for export to the U.S., not the local Chinese market.

 

[spwolf]

FAW and GAC are state-owned companies and are thus less sensitive to cost: the losses are absorbed by the state. It's common for state-owned auto makers to overbuild facilities for future expansion, therefore most of the upfront cost has already been spent. GAC/Toyota Plant 3 is rated for 220k vehicles per year, do you think they are going to really make that many C-HRs?

It could build another TNGA vehicle, or more... new TNGA based small suv is coming too.

 

[mikeavelli]

I saw this short clip below on Auto News... sort of related...

Toyota sets tough China sales target for 2018

Toyota aims to sell 1.4 million vehicles in China this year, nearly 9 percent above its 2017 tally, but company insiders say production constraints and other hurdles make it a tough target to meet.

 

[Joaquin Ruhi]

I saw this short clip below on Auto News... sort of related...

There's a corresponding written article but it doesn't say a word about Lexus.

 

[spwolf]

I saw this short clip below on Auto News... sort of related...

A big factor that makes selling 1.4 million vehicles this year more of a challenge is Toyota’s manufacturing capacity -- which the two individuals said remains strained.

“If we could resolve this capacity issue, it would be easy to make the 1.4 million target. With sufficient capacity, we can possibly sell 1.5 million vehicles,” one of the two people said.

On Friday, Toyota said its sales in China in January rose 25 percent from a year earlier to 127,500 vehicles. Smaller rival Honda's sales in China, meanwhile, rose 11 percent in January to 126,174 vehicles.

big gains again for Toyota... Lexus cant be far behind.

I wonder why the gain, didnt see tables anywhere posted, i guess @ssun30 will know more... new Camry already launched?

 

[ssun30]

big gains again for Toyota... Lexus cant be far behind.

I wonder why the gain, didnt see tables anywhere posted, i guess @ssun30 will know more... new Camry already launched?

1) Bank holidays usually precede Chinese New Year by a week, so people are rushing their purchase to get their cars financed.

2) CNY was Jan 28 in 2017 while it's Feb 15 in 2018. So there are fewer selling days in Jan 2017 compared to Jan 2018. In that sense Honda's sales shrank, possibly due to all Civic/CR-V backlogs cleared in the past year.

3) GAC obviously benefited from the Camry launch. The car had 30,000 pre-orders in a month after Dec 2017 launch and 12,000 deliveries in Jan 2018.

4) GAC offered a ¥23,000 discount (~20%) to the Levin making it a huge seller.

An important takeaway: TMC's aggressive styling seems to be well received in China. The traditional East Asian value of subtlety and humility does not apply to the booming middle class. They want their cars to stand out. A quarter of the XV70 Camry sales are SE with the 2.5 and quad exhaust, while the 2.0 (traditionally the strongest seller) now only counts for 20%. Toyota nailed it by marketing it as a sports sedan and proves that they can still do well with a big NA engine in a market filled with downsized turbos. Hybrid sales increased as well due to an impressive 4.1L/100km (57MPG) record which beats the Corolla Hybrid.

Still the Camry is outsold by the Accord by about 25%. However the Accord had a decade head start and is the most well established family sedan (along with VW Passat and Buick Regal) in China. Honda now holds a slight advantage over Toyota, but that's mostly because Honda has a much broader product portfolio (and more intense internal rivalry) and Toyota is mostly capacity-strained. When the GAC C-HR/FAW Izoa and a whole lot of TNGA vehicles kicks in Toyota should handily win over Honda this year, as long as they can keep the orders delivered. When the FAW RAV4 launched it had an eight-month backlog, expect the same for the C-HR twin.

The comment on the 1.4M target mostly being constrained by capacity is true, since they are overhauling so many lines this year. There should be a lot of headaches going on in the production engineering department. But it will be a huge long term benefit since TNGA lines will be much more efficient.

 

[spwolf]

@ssun30 is FAW getting Camry too?

 

[ssun30]

@ssun30 is FAW getting Camry too?

No they get the Avalon to replace Reiz/Crown. They avoid competing directly against GAC in low-volume segments.

 

[mordecai]

ssun30 - I just have to say you're a great contributor to this forum along with the likes of krew, Joaquin Ruhi, carmaker1 and spwolf. This is my go-to Lexus forum now for months.

 

[spwolf]

No they get the Avalon to replace Reiz/Crown. They avoid competing directly against GAC in low-volume segments.

When is Avalon coming? Did they introduce it yet? Do you know projected sales? What about Camry? 12k per month seems little

 

[spwolf]

This seems to fit here:
http://bestsellingcarsblog.com/2018...xclusive-detailed-imports-data-now-available/

BMW is the best-selling importer in China for 2017, with a slim 4.000 unit-margin over #2 Mercedes, both above 170.000 units. Pure importer Lexus is above 130.000 sales in third place followed by Toyota (76.000) and Porsche (69.000).

....

Over in the models aisle, the Chinese tastes are clear: 8 luxury SUVs in the Top 10, although the overall best-seller is a sedan: the Lexus ES leaps from #4 in 2015 to pole position and earned its 2017 victory with 11 monthly wins (every month bar January) and an almost 7.000 sales gap with the #2, the BMW X5 which was leader two years ago and ranked #1 in January but #2 during every other month of 2017. #3 in 2015, the Jeep Compass has been replaced by a locally-produced model in 2017 and accordingly sees its imported ranking plunge to #139 this year, illustrating the fate of brands that become local producers. The Toyota Prado is knocked down to #3 and is one of only a handful of nameplates that sell well both their locally-produced and imported variants. The BMW X3 comes in 4th (+1 on 2015) while the Mercedes GLE rounds up the Top 5, almost exactly replacing its predecessor the M-Class (#6 in 2015). The Porsche Macan ranks at a very impressive 6th place, one of Two Porsches in the Top 10. Porsche maintains an impressive presence in the Top 10 with both the Macan (#6) and Cayenne (#9) up one spot on their 2015 rankings. Lexus adds the RX (#7, +32) and NX (#10, -1) to make it three nameplates inside the imported Top 10, the most of any importer. Fantastic performances of the Mercedes CLA at #8, BMW 7 Series at #11 with almost 25.000 sales, the Nissan Patrol getting a good kick at #16

Lexus ES most imported car in the China

 

[ssun30]

When is Avalon coming? Did they introduce it yet? Do you know projected sales? What about Camry? 12k per month seems little

The Avalon has not been introduced. Production should begin in the second half. It's still unknown whether it will be for 2018 or 2019 model year (China use current year+0 for MY instead of the +1 system used in USA). The projected sales figure will not be included in the 1.4 Million vehicle target, since these 200k extra will most likely be from C-HR and Corolla facelift.

As I've said before, the Camry is not a bread-and-butter family sedan in markets outside of North America: that role is filled by the Corolla/Avensis. The Asia-spec 'Camry Prestige' is an upmarket sedan that targets more affluent families and small businesses. It's only since XV70 that Toyota merged the NA-spec and Asia-spec into one international model. 12k per month is actually a decent number of sales considering the Camry nameplate is not as well known as the Passat/Accord.

The Crossover takeover is happening in China too. The Highlander now comfortably outsells the Camry. That's why Toyota now markets the XV70 Camry towards a different group of buyers. If FAW plays its cards right, the Avalon shouldn't be fighting GAC Camry directly.

This seems to fit here:
http://bestsellingcarsblog.com/2018...xclusive-detailed-imports-data-now-available/

I'm surprised to see the RX doing better than the NX, because it seems that lots of young shoppers go to Lexus dealerships just for the NX. Maybe they are let down by the cramped interior? Subpar interior quality? Underpowered engines? Too much backlog? I don't really know. I will find a chance to talk to my dealer friends about how they convince buyers to upgrade to the RX.

 

[spwolf]

The Avalon has not been introduced. Production should begin in the second half. It's still unknown whether it will be for 2018 or 2019 model year (China use current year+0 for MY instead of the +1 system used in USA). The projected sales figure will not be included in the 1.4 Million vehicle target, since these 200k extra will most likely be from C-HR and Corolla facelift.

As I've said before, the Camry is not a bread-and-butter family sedan in markets outside of North America: that role is filled by the Corolla/Avensis. The Asia-spec 'Camry Prestige' is an upmarket sedan that targets more affluent families and small businesses. It's only since XV70 that Toyota merged the NA-spec and Asia-spec into one international model. 12k per month is actually a decent number of sales considering the Camry nameplate is not as well known as the Passat/Accord.

The Crossover takeover is happening in China too. The Highlander now comfortably outsells the Camry. That's why Toyota now markets the XV70 Camry towards a different group of buyers. If FAW plays its cards right, the Avalon shouldn't be fighting GAC Camry directly.



I'm surprised to see the RX doing better than the NX, because it seems that lots of young shoppers go to Lexus dealerships just for the NX. Maybe they are let down by the cramped interior? Subpar interior quality? Underpowered engines? Too much backlog? I don't really know. I will find a chance to talk to my dealer friends about how they convince buyers to upgrade to the RX.

As I am from Europe, I quite understand that Camry is not a huge seller worldwide, as it is too big and expensive... unfortunately Avensis sales have shrunk to around 20k per year, and quite possibly we will be getting a Camry in the future too. Corolla is almost non existent here, at least in sedan form. In fact, Avensis always outsold Corolla sedan, despite its much lower price.

Do you know about target sales for Avalon? It is good that they are expanding Avalon to more markets.

As to the NX vs RX, RX outsells NX worldwide... RX is after all, original luxury crossover. Pretty sure the same is with X3 vs X5.

 

[spwolf]

p.s. I am sure they calculated CHR into 1.4m... but keep in mind as C-HR sales go up, some older models will go down because they are getting old... like Rav4...

 

[spwolf]

Here is report for top 100 cars sold in china, for people who would like to check it out. Report excludes imported vehicles, so no Lexus:

http://focus2move.com/best-selling-cars-models-in-china/

 

[ssun30]

Do you know about target sales for Avalon? It is good that they are expanding Avalon to more markets.

One thing FAW didn't expect last year was a 50% surge in Crown sales, which means they are in no rush to phase it out just yet. Therefore I think Avalon should be part of their 2019 lineup. I think the target will basically be to replace the Reiz and Crown combined for ~60k units per year. It's a humble target but all they need is presence in this segment.

p.s. I am sure they calculated CHR into 1.4m... but keep in mind as C-HR sales go up, some older models will go down because they are getting old... like Rav4...

The RAV4 is too capacity-strained at this moment. It had only 120k sales in 2017 while it has the potential for at least 180k. C-HR launch won't affect RAV4 too much, in fact it will relieve the backlog and bring impatient buyers back.

 

[spwolf]

One thing FAW didn't expect last year was a 50% surge in Crown sales, which means they are in no rush to phase it out just yet. Therefore I think Avalon should be part of their 2019 lineup. I think the target will basically be to replace the Reiz and Crown combined for ~60k units per year. It's a humble target but all they need is presence in this segment.



The RAV4 is too capacity-strained at this moment. It had only 120k sales in 2017 while it has the potential for at least 180k. C-HR launch won't affect RAV4 too much, in fact it will relieve the backlog and bring impatient buyers back.

Is it already official that Avalon is replacing Crown? Could they be sold together?

 

[ssun30]

ssun30 - I just have to say you're a great contributor to this forum along with the likes of krew, Joaquin Ruhi, carmaker1 and spwolf. This is my go-to Lexus forum now for months.

Thank you very much. But to be fair most of the information I share on this forum is from a senior engineer at TMEC, Toyota's R&D center in China. This is a very competent guy (probably one of the best engine calibration engineers in the country) and also a very smart one: he knows how to share as much insider information to the public as possible without getting any legal troubles. The projects he had worked on are impressive: the 5NR-FE, 8NR-FTS, 6AR-FSE, A25A-FKS are all calibrated by his team. And now he works on the A20A-FKS as well as a series of engines that will be gradually introduced until 2025(!).