Toyota stalls plans to build Lexus models in China

Toyota stalls plans to build Lexus models in China

Toyota has reportedly stalled plans to build Lexus models in China.

Two company executives told Reuters that sales must consistently surpass 100,000 units annually in the country before it will make sense to invest hundreds of millions of dollars into a new assembly line.

Automakers have been scrambling to establish a manufacturing presence in the world’s largest automotive market, where sales have exploded in recent years. The situation has changed in the past few months, however, with June sales representing the first decline in 28 months.

The latest trouble has been blamed on a volatile stock market, with a recent selloff erasing nearly $4 trillion in value. Even if the market completely rebounds, analysts fear that the country could be facing slower economic growth and more cautious purchasing behavior from automakers’ target customers.

Toyota had been nearing a final decision on Lexus production in China when the crisis struck. One executive suggested the weak yen may be an even more significant factor that discourages an immediate production shift out of Japan.

“Toyota’s committed to China, and we will eventually start producing Lexus cars here,” one executive said.

The ES sedan and RX crossover are said to be the top choices for local assembly in China. Depending on market conditions and sales performance, Toyota is now said to be eyeing 2018 as the earliest window for building a Lexus factory in the country.

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