Localization? When to localize? With whom to partner for localization? These questions have puzzled the industry for years.
Now, with the accelerated transformation of China's automotive market towards electrification and intelligence, the path to localizing Lexus seems to have finally seen a new dawn—a wholly-owned factory in Shanghai.
A Rocky Road to Localization
According to Toyota's latest global sales data, Lexus achieved global sales of 769,252 units from January to November 2024, a year-on-year increase of 3.8%. Among these, sales in the Chinese market exceeded 160,000 units, making it the second-largest market after North America. Lexus's share of Toyota's sales in China has risen to 10%.
Looking back, the journey of Lexus towards localization has been fraught with obstacles.
From debates over production standards to the unilateral enthusiasm of FAW Group, and even Toyota's decision to establish Lexus's overseas base in India, none of these efforts came to fruition.
However, with China's remarkable advancements in new energy vehicle (NEV) technology and shifts in the global automotive trade landscape, the focus of Lexus's localization has subtly shifted.
Today, the primary questions have become whether Lexus needs to localize amid the wave of electrification and intelligence and how it should localize.
Wholly-Owned Localization: A Wise Choice for Lexus
Recently, rumors about Lexus's localization have once again gained traction. This time, it is no longer about the tug-of-war between FAW and GAC Toyota but rather about adopting Tesla's successful experience of establishing a wholly-owned factory in Shanghai.
China's automotive industry, with its well-developed manufacturing equipment and supply chains, is more than capable of meeting Lexus's rigorous requirements for quality and technology. Particularly in the fields of electrification and intelligence, China leads the world.
Therefore, for Lexus, establishing a wholly-owned factory is undoubtedly a wise choice.
By choosing wholly-owned localization, Lexus is not just creating a "new brand." It also marks a significant milestone for China's automotive industry and its open economy.
From the 50:50 equity ratio restriction to the relaxation of these restrictions and Tesla's wholly-owned localization, these changes highlight the rapid rise of China's automotive industry and the growing strength of its independent carmakers.
Amid China's transformation towards electrification and intelligence and the new environment of global automotive trade, Lexus's choice to pursue wholly-owned localization appears to be its most prudent decision.
This move not only counters global automotive trade protectionism but also affirms China's level of market openness.
Breaking Away from FAW and GAC Toyota: Toyota's Tough yet Decisive Call
For a long time, Lexus wavered between FAW and GAC Toyota, dealing with not just profit distribution but also future capacity planning.
However, with the rapid development of China's automotive market and the rise of independent brands, Toyota finally decided to break away from FAW and GAC Toyota and chose to set up a wholly-owned factory in Shanghai.
This decision reflects Toyota's pursuit of maximizing profits and its deep insights into the future development of China's automotive market.
For years, joint ventures have been criticized by independent carmakers as failed examples of "exchanging market access for technology."
Today, independent brands such as BYD and Chery have risen to become central players in China's automotive market. For FAW and GAC Toyota, the time has come to learn to stand on their own.
With the accelerated transformation of China's automotive market towards electrification and intelligence, along with changes in the global automotive trade environment, the joint venture model has entered a new chapter.
In this new era, Chinese cars are no longer just "Made in China" but also represent "Created in China" and "Chinese brands."
The wholly-owned localization of Lexus is not only a new starting point for China's automotive market but also an important symbol of the true globalization of the global automotive industry.
Lexus's wholly-owned localization will mark a new era in which China's new energy vehicles fully enter the global market. At the same time, it will support the independent development of Chinese carmakers and promote China's automotive industry to expand overseas.
Chinese cars will not only symbolize manufacturing strength but will also lead global markets with technological and branding power.
For both China's automotive industry and the global automotive landscape, this will usher in an era full of opportunities and challenges.
