Toyota, FAW to build Prius hybrid car in China
JAPAN: September 17, 2004
TOKYO/SHANGHAI - Toyota Motor Corp. (7203.T: Quote, Profile,
Research) will start building its Prius hybrid sedans in China next
year with FAW Group in a step it hopes would promote the vehicles as
the global standard for fuel-efficient cars.
The move could also help China as it looks for alternative energy
sources and tries to keep pollution in check while demand for cars
continues to expand.
Toyota, the world's second-largest auto maker, and First Automotive
Works, China's biggest, said in a statement this week they may also
consider building an FAW-brand hybrid featuring Toyota's technology.
"China's new auto policy places a lot of importance on the
environment, and we want more customers to realise the benefits of
hybrids," Toyota Senior Managing Director Akio Toyoda told reporters
in Beijing, according to a Toyota spokesman.
Gasoline-electric hybrids are the most fuel-efficient mass-market
vehicles on the road now, with a four-seater offering about twice the
mileage of comparable gasoline-powered cars.
Toyota and partner FAW plan to assemble the Prius in the industrial
city of Changchun in northeastern China by the end of 2005 with
complete knock-down kits (CKDs) imported from Japan, a Toyota
spokesman said.
Output volume has yet to be decided.
The Prius, which costs about $20,000 and can get up to 35.5 km a
litre (84 miles per gallon), enjoys a strong following in the United
States, where customers wait months for delivery.
Analysts said, however, that it remains to be seen whether they would
catch on in China.
"Concerns about safety and the environment are the luxury of
developed or wealthy countries," said Tim Dunne, a managing director
at consultancy Automotive Resources Asia.
"The government is very serious about protecting the environment, but
getting the consumers to buy that is a different story. I don't think
people will willingly open their wallets to spend extra money for the
environment."
PRIUS IN DEMAND
Toyota, which became the world's first to develop a hybrid car for
mass production in 1997, has targeted annual global sales of 300,000
hybrid vehicles by 2005 to lower production costs.
"Toyota is aiming to supply hybrid cars globally ... and we are also
considering building the Prius and other hybrid vehicles in North
America," Toyoda was quoted as saying at a signing ceremony in
Beijing, attended by the presidents of FAW and Toyota.
Toyoda's comment marked a shift in Toyota's stance after the auto
maker had repeatedly said it would be difficult to produce hybrids in
North America without the necessary components supply base. The Prius
is currently only built in Japan.
With global supply for the model falling far short of orders, Japan's
top auto maker has said it would raise output capacity by half to
15,000 units a month in the first part of next year.
Rival General Motors Corp. (GM.N: Quote, Profile, Research) ,
meanwhile, has been promoting the benefits of hydrogen-powered
fuel-cell vehicles, including in China, and has said it would be able
to commercialise the zero-emission cars by 2010.
China is the world's largest consumer of oil after the United States,
importing more than a third of its oil needs. Beijing is concerned
that an energy shortage could stymie economic growth.
Under its auto policy revised in June, the government has said it
wants to raise the average fuel efficiency on vehicles by 15 percent
by 2010 from last year's levels.
To do so, it has said it would support research into alternative
powertrains such as hybrids and cleaner diesel engines, while also
exploring fuel-cell vehicles.
After doubling in 2003, Chinese car sales are forecast by analysts to
rise by a more modest 10 to 20 percent this year as the government
tightened controls on auto loans to prevent the possibility of a rash
of new sour debt.
In the first eight months of this year, sales totalled 1.506 million
cars, up 24 percent from the year before.
Toyota has partnered FAW since 2002, and makes the Vios and Corolla
sedans through a joint venture with Tianjin FAW Xiali Automobile Ltd.
(000927.SZ: Quote, Profile, Research) . FAW Group unit Changchun FAW
Fengyue Auto separately builds Toyota's Land Cruiser 100 model.
(Additional reporting by David Lin and Lu Jianxin in Shanghai and
Shusaku Hattori in Tokyo)
Story by Chang-Ran Kim and Edwin Chan
REUTERS NEWS SERVICE
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