Regardless of whether it is acknowledged or not, Toyota is facing significant challenges in China
The economic downturn is not a reason for a product to remain stagnant. In fact, challenging times necessitate the creation of better products.
Do you know when was the last time the Ideal L7 (one of the hottest SUVs in the current Chinese automotive market) sold over 10,000 units in a month? The answer is: last month.
Now, do you know when was the last time the Toyota Highlander (Hanlanda) sold over 10,000 units in a month? The answer is: fifteen months ago.
According to the publicly available data from the China Passenger Car Association, in the first four months of this year, the sales of Toyota Highlander remained below 5,000 units, with a dismal figure of only 4,170 units sold in the worst-performing month of March. Although there was a slight improvement in May with 5,636 units sold, it is still quite disappointing compared to the Highlander's long-standing reputation in the Chinese automotive market.
However, what's even more disheartening for Toyota is that since surpassing the 10,000 unit mark in January last year (13,189 units), the Highlander has been stuck in a downward spiral with seemingly no way out. The market penetration rate within the GAC Toyota brand has also plummeted from over 20% to around 7%.
It's important to note that just two years ago, amidst a background where customers had to pay extra and pull strings to get their hands on a Highlander, the model achieved impressive consecutive monthly sales of over 10,000 units for three months, with a remarkable single-month sales figure of 14,401 units.
However, now the once illustrious Toyota, in its struggle for survival, has humbled itself by significantly lowering prices, slashing a whopping 20,000 yuan off the new car's price at the Highlander Brand Day event. It's truly thought-provoking to see how Toyota, once invincible, has fallen into such a predicament.
When the tide recedes, it turns out Toyota was swimming naked.
On May 25, 2009, the second-generation Highlander made its official debut and price announcement in mainland China, ranging from 248,800 to 429,800 yuan.
Just how popular was this vehicle? Within one month of the price announcement, cumulative nationwide orders for the domestically produced Highlander had exceeded 8,000 units. The phenomenon of price markups and waiting lists quickly spread to various core regions in China, prompting GAC Toyota to put production expansion plans on the agenda.
The reason behind the Highlander's success was rather straightforward: Firstly, at that time, the Chinese car market had a severe lack of options in terms of vehicle models. This meant that for Chinese consumers looking to spend around 300,000 yuan on a 7-seater mid-size SUV, there simply wasn't another choice. Secondly, Toyota's vehicles were regarded by Chinese consumers as durable, reliable, and with a high resale value, aligning perfectly with the car-buying preferences of budget-conscious individuals at that time.
In summary, it can be said that the Highlander was born at the right time.
Compared to those joint venture brand models that entered China but quickly faded into obscurity, the luck of the domestically produced second-generation Highlander can be considered "off the charts." However, even with such fortunate circumstances, it pales in comparison to the third-generation Highlander.
On December 27, 2015, the Standing Committee of the National People's Congress passed the amendment to the Population and Family Planning Law, officially implementing the universal two-child policy starting from January 1, 2016. Nine months before the policy was announced, GAC Toyota had already begun domestic production of the third-generation Highlander, while its competitors in the 7-seater SUV segment were still waiting for higher-level approvals for mass production. Toyota, on the other hand, effortlessly pocketed the natural dividend brought about by the policy changes.
It is not an exaggeration to say that both generations of domestically produced Highlanders in China had a "glorious" existence solely supported by Toyota's unparalleled stroke of luck in those times.
Riding the wave of trends, coupled with the lackluster performance of competing models, the Highlander managed to maintain steady sales among pragmatic middle-aged buyers, despite lacking any significant ambition in product iteration.
For instance, even on the third-generation Highlander, priced close to 250,000 yuan, you can still find a series of retro features inherited from Toyota's traditions, such as drum brakes, halogen headlights, zero parking sensors, zero driving assistance, manually adjustable plastic steering wheel, and fabric seats.
Not to mention advanced features like large infotainment screens, voice control, remote upgrades, and in-car refrigerators. In this price range, Toyota generously provides you with Bluetooth music playback, and that's about it.
In 2019, when the Chinese new energy vehicle startup Ideal unveiled its SUV model, the Ideal ONE, equipped with various cutting-edge technologies, many people exclaimed, "Times have changed." However, at that time, Toyota was busy with the generational transition of the Highlander in the US market, as the importance of that market, in the minds of Toyota executives at the headquarters in Japan, always overshadowed the Chinese market.
The internal neglect of Chinese-branded models within the company, coupled with the arrogance that comes from long-standing strong sales, has caused the domestically produced Toyota Highlander to lose the "first-mover advantage" it tightly held for over a decade on its fourth-generation model.
In a recent new car launch event, in an attempt to evoke nostalgia, Toyota defined the Highlander as a "friend of time." This marketing term could only be conceived by someone who has little understanding of the company.
It's clear to anyone with discerning eyes that the Highlander is not a friend of time; it is a friend of opportunity.
Chinese brands surpassing Toyota effortlessly
In April 2019, Toyota unveiled the fourth-generation Highlander at the New York Auto Show. In Toyota's perception, although the Chinese automotive market had undergone changes, their competitors were still those underachievers who they could easily defeat ten times over: the Touareg, the Q5L, the Crown Road, and the Explorer.
Even if these small opponents were given more time for upgrades, it would not affect the dominance and confidence of Toyota when it comes to asserting its position as the king of the market.
In June 2021, after a full two years of selling in North America, the fourth-generation domestically produced Highlander finally arrived in China. This marked the opening of Toyota's nonsensical soap opera in the Chinese market.
Upon its release, the pure gasoline powertrain, which had a solid reputation, was completely removed from the lineup, and all models were equipped with a 2.5-liter hybrid powertrain. The starting price for the five-seater models was 268,800 yuan, while the seven-seater models started at 274,800 yuan.
Although the price of the entry-level model increased by 29,000 yuan compared to the previous generation, it is difficult to pinpoint exactly where this nearly 30,000 yuan is reflected in the actual features. The outdated large bezel infotainment screen, fabric seats reminiscent of the Showa era, and the near absence of driving assistance features constantly remind you that this is a Toyota with a traditional "craftsman's quality" that stands out from the current trends.
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