Share with others:
Toyota: We can no longer compete with Chinese brands on price
Chinese automakers are rapidly changing the balance of power in the global market. Toyota has now openly admitted in South Africa that it can no longer directly compete with Chinese brands at entry-level prices.
The statement came at the launch of the new generation RAV4. Toyota South Africa explained that aggressive Chinese manufacturers have significantly changed the lower end of the market, so Toyota does not intend to engage in a price war. Instead, the new RAV4 aims to move up the price and quality scale.
Chinese brands are exerting pressure mainly through price
The problem for traditional manufacturers is that Chinese brands often offer a lot of features for much less money. Large screens, modern drives, rich standard equipment and long warranties are already standard on many models.
Toyota therefore estimates that it simply cannot compete on equal terms at the lowest price level.
The pressure is even greater because cheap Chinese cars compete not only with new vehicles from traditional brands, but also with used cars. A buyer who would once have chosen a few-year-old Toyota or Volkswagen for the same money can now choose a brand-new Chinese model.
Toyota is betting on reputation and reliability
Instead of lowering prices, Toyota wants to convince customers with other arguments: reliability, build quality, a developed service network, the brand's reputation, and the higher value of the car after several years of use.
This is a significant change. For decades, Toyota has been synonymous with efficient, reliable, and affordable cars. For such a large manufacturer to admit that it can't keep up with Chinese competition on price in a certain segment of the market is a clear sign of how quickly the auto industry is changing.
Chinese manufacturers are no longer interesting just because they are cheap. Their biggest advantage is the combination of price, equipment, rapid development and electrified drives.
Toyota has therefore chosen another path. Instead of a price war, it wants to justify the higher price. The real question is how many customers will be willing to pay the difference with the increasing choice of Chinese models.
