Lexus may suspend local production in China

By Ally From:  www.gasgoo.com

Japan's largest auto maker Toyota Motor Corp may suspend production of Lexus luxury vehicles in China, an unnamed company official said yesterday.

Earlier this month Toyota has started to sell Lexus LS 600hL to the Chinese market. But Toyota has shortly quit plans to produce the model locally in China.

Since the founding of Guangzhou Toyota Motor, there are always speculations whether Lexus can realize its local production in China.

Zeng Lintang, vice president of Toyota Motor (China) Investment Co once said that they will consider producing this model locally in China when the sales volume of Lexus reaches 30,000 to 40,000 units.

Sales statistics show that if Lexus sales keep growing at the current rate, it may reach 40,000 units within one year. But the company source says the company may suspend the production plan for two reasons.

First, Lexus is extremely profitable if it is sold in completely built unit in China. For example, Lexus LS600hL is now sold at $ 104,000 (786,000 yuan) in the USA, but $210,263 (1,598,000 yuan) in the Chinese market. Other Lexus models are sold at even higher prices.

Secondly, quality control is more important than saving cost. Toyota's Lexus finished first in the J.D. Power reliability survey in the past, but it lost its laurel to its competitors in the latest survey. Toyota has quality concerns if Lexus is going to be made locally in China.