Chapter 1243 – Toyota’s anger
“President, something bad had happened!” The person-in-charge of Asia, Junichiro Watanabe, rushed into Toyota’s President, Fujio Cho, office.
Fujio Cho puts down the document he was reading and frowned. “What happened? Did General Motors make any announcements, or is it Volkswagen or BMW? Is it about Tata Motors?”
In Japan, Toyota had successfully overtaken Honda to become No. 1. It had started to reenter the North American market these few years. They can complete with General Motors in their backyard now.
Both companies are doing about the same in Asia. Still, as Toyota slowly opened up the Chinese market, they become more confident of exceeding General Motors. The forecast they can become the World’s biggest automobile manufacturer in five to eight years.
This year, Toyota’s forecasted profits before taxes are over 6.5 billion USD, and it will increase by 15% the following year. Within three years, they will become the World’s Second biggest automobile manufacturer. They firmly believe they can become the best in the world.
“No… it’s not about those major automobile manufacturers. Wait… this company can also be considered a major automobile manufacturer. They had started just made an announcement which will affect us greatly.”
“What do you mean by ‘can be considered a major automobile manufacturer’? Which company are you talking about? Nissan? Hyundai?”
“No. It’s a Chinese manufacturer, Bing City Machinery Manufacturing Group.”
Bing City Machinery Manufacturing Group?
Fujio Cho frowned. It’s hard to categorize this company. This company had occupied most of the Chinese market and had quite a significant market share in the East Europe market. Their cars are also exported to the US too.
But this company’s technology is not strong and is only good with its exterior designs and comfort levels. The other technologies like the engine and chassis are only second-rated.
But because this company owns most of the Chinese market, its annual sales exceeded more than 1 million last year. 1 million vehicles’ sales are the benchmark for major automobile manufacturers and ordinary manufacturers. Toyota had only sold less than 6 million vehicles last year.
Although there is still a big difference, when Toyota’s annual sales had just exceeded 4 million, Bing City Machinery Manufacturing Group was still manufacturing tractors!
This development speed is terrifying!
Fujio Cho is furious. If it was not for this company, they would have gotten better terms in their joint ventures with the Chinese manufacturers. These terms are worth more than 500 million USD!
Toyota can export more cars into China and can increase their profits by a lot more. Bing City Machinery Manufacturing Group had slowed Toyota’s expansion plans, especially in China.
To Toyota and other automobile brands, the Chinese Government purchasing Songjiang Motors vehicles shows their support for this company! But the real reason is that Songjiang Motors vehicles are cheaper and more comfortable.
There are no Songjiang Motors and Chinese Government purchased mostly Audi cars in Feng Yu’s previous life.
“What happened with this company?” Fujio Cho asked.
“They introduced two new Oriental Deer models. Oriental Deer is their SUV brand, and their new models are 4L and 4.8L versions. They are also introducing a series of new cars and pickups. These are the types of vehicles we are trying to sell in China.”
SUVs and pickups are the main vehicle types Toyota are selling in China. Their saloon cars are not selling well there and cannot compare to those joint ventured cars and Songjiang Olympics.
Toyota was confident they can increase their market share in China with their high CC SUVs and pickups this year. But out of their expectations, Bing City Machinery Manufacturing Group is increasing their variety of vehicles by introducing the same vehicle types. This is declaring war with them for the market share!
What shocked Fujio Cho the most is Bing City Machinery Manufacturing Group can manufacture higher CC engines. This means their technologies had improved a lot.
“How much are they selling these two models?”
“The two Oriental Deer versions, 4.0L model’s overseas retail price is 49,900 USD and 359,900 RMB in China. It is less than 45,000 USD when converted. Their 4.8L model’s overseas retail price is 59,900 USD and 459,900 RMB in China. When converted to USD, it is around 50,000 USD. Their pickups also have 4.0L and 4.8L models and are using the same engines. Their selling prices in China are lower than overseas…”
Toyota 4500’s retail price is more than 600,000 in China. It is much more expensive when compared to Bing City Machinery Manufacturing Group.
This Bing City Machinery Manufacturing Group had really developed low-cost, high CC engines!
Wait. Overseas retail prices? Are they going to export these models overseas?
“Are you referring to East Europe when you mention overseas selling price?”
“No. Not only in East Europe. They had announced in the press conference that they will be entering the US and Europe markets. President, pickups, and SUVs are very popular in North America, Europe, and even Africa markets. If they started producing these low-cost models overseas, it would have a great impact on our sales!”
“Not only in East Europe? How can they sell their vehicles at such prices in the US and Europe? Don’t they need to pay taxes? Are they not trying to make money?” Fujio Cho is puzzled. He knows the cost of manufacturing a car, and what about other additional costs? Advertisements, transportation, etc., are all additional costs.
“President, the importation taxes in the Western Countries are not high for such products. Furthermore, China had joined the WTO and have tax subsidies. Most importantly, Bing City Machinery Manufacturing Group has joint ventured manufacturing plants in the US and UK!”
“Don’t tell me these. I just want to know if we can lower our cost further.”
“President, our efficiency is higher than them, but the labor costs in China are very low.”
“Other than the Chinese market, can we suppress them in the western markets?” All these are excuses. Bing City Machinery Manufacturing Group will not have labor cost advantage in the Western markets.
“This is not a problem. Their retail prices will not bring them many advantages in those markets, and they will not get many profits there. I think we can work with other manufacturers to suppress them!” Junichiro Watanabe replied confidently.
“Work with other manufacturers? Do you think it is possible? Are you confident?”
“How do we know it will not work if we didn’t try? After Bing City Machinery Manufacturing Group is destroyed, the Chinese market will be opened to us! I believe all the manufacturers will be eyeing this vast market.”
“Alright. You will be in charge of contacting other manufacturers. If you succeed and we can open up the Chinese market, I will recommend you to be the Vice-President!”
Fujio Cho
