China’s GAC aims for 1 million cars a year for its Toyota, Honda JVs

BEIJING — GAC’s joint ventures with Toyota and Honda are aiming for a big boost in annual China sales to a million vehicles each by 2025, according to a recording of a GAC call with investors.

At a joint venture with Toyota, that would represent a jump of 47 percent from 2019 levels while at a venture with Honda that would be a 30 percent surge.

Vehicles made by the JVs are mostly sold under the Japanese brands.

The state-owned automaker will also aim to sell 1 million units annually under its own brand by 2025, Feng Xingya, GAC’s general manager told investors and analysts on the call Wednesday.

It was not clear when the plans were formed. For the current year, it expects industry-wide China auto sales to tumble 10 percent due to the impact of the coronavirus outbreak although it expects its sales, which include sales of its JV partners, to climb 3 percent.

The long-term plans come as the state-owned automaker expands manufacturing capacity.

GAC Honda currently has annual production capacity of 770,000 vehicles while GAC Toyota is building new electric vehicle plants that will take its capacity to around 1 million vehicles per year.

But those capacity figures exclude potential overtime shifts.

In 2019, when GAC Honda recorded a 4 percent rise in China sales to 770,884 cars, its capacity utilization rate was around 119 percent.

GAC Toyota, which saw an 18 percent jump in China sales to 682,008 cars was operating at 140 percent of annual production capacity.

“We can reach higher production by arranging extra shifts at current plants. Capacity will not be a big problem,” GAC Chairman Zeng Qinghong said on the call.

Toyota and Honda declined to comment on the sales plans. GAC did not respond to a request for comment.

Sales of GAC-branded cars tumbled 28 percent to 384,578 units in 2019. For the year, GAC’s revenue tumbled 18 percent, while net profit attributable to shareholders dropped 39 percent, according to a company filing.

Asked about its money-losing venture with Fiat Chrysler Automobiles, GAC executives said the automaker will explore more opportunities to export China-made vehicles to Southeast Asian countries.

To meet government quotas for sales of new-energy vehicles, Zeng said the venture with FCA will also sell some models under the GAC brand, a strategy it is also employing at joint ventures with Toyota and Honda.