Blog: Dave LeggettToyota Prius build in China

Dave Leggett | 16 September 2004

In yesterday's weekly newsletter I mulled Toyota's reported plans to make the Prius in China, focussing on the development of the local market. That's how the move is being couched, but I've had a few e-mails pointing out that the move could well be more about using China for low-cost production of the car for export out of China. Yep, that could make sense if Prius production capacity in Japan is under pressure in a few years' time. Toyota has said that it is increasing production in Japan to ease the backlog of orders for the car, but if demand surges further and capacity stays tight, that could well be an attractive option. But I'm still not sold on the idea that there is a ready market in China for a vehicle like Prius. I guess then the question becomes, so what volume are we talking here?

The underlying point I would like to make is that China is very different from many automotive markets and there's a danger in making assumptions about its future development. I've put an interpretation on the Prius move - 'they're ready for hybrid technology' - that may well be a little unfair, but there seems to be a general tendency right now to view almost everything automotive in terms of its 'China dimension' and a linear development path that the rest of the industry around the world has followed. Some things simply may not have a China dimension right now.    

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