Toyota sees China sales on target, aided by cut in inventories, tax

By Norihiko Shirouzu

BEIJING (Reuters) - Toyota , which on Friday posted a 9.2 percent rise in China April sales, is on course to meet its full-year sales target for the world's largest auto market, driven by lower retail inventories and a tax cut on small-engine cars, company officials said.

The year-on-year April sales growth to about 101,100 vehicles at the maker of cars including the Corolla compact sedan and the Highlander sport-utility vehicle comes after it clocked a 40.6 percent jump for March and reflects a slightly-better-than-expected sentiment in the Chinese auto market.

Sales this year through April in China totaled 392,100 vehicles, up 22.4 percent from the same period a year earlier, Toyota said on Friday.

Company officials have said Toyota’s growth in China has outpaced most rivals’ chiefly because of a relatively steady paring-down of inventories it implemented at its retail stores, as well as because of the strong sales of several models, including compact cars and the Highlander SUV.

Toyota officials, who spoke on condition of anonymity, said on Friday the company was on the trajectory of achieving its 2016 China sales goal given the growth pace so far.

Hiroji Onishi, head of Toyota’s China operations, has said the company as a result is on course to achieve its goal of selling at least 1.15 million vehicles in China this year, up 2.7 percent from 2015.

“Every month so far this year we have been able to sell as planned,” Onishi told reporters in Beijing last month just ahead of the Beijing autoshow, which finished earlier this week.

The Toyota executive attributed the automaker's sales growth partly to the positive effects from a government tax cut on small-engine vehicles, which Beijing enacted late last year and will be in effect through the end of this year.

The tax cut helped boost sales of the Corolla and the Levin, Onishi said.

More important, Toyota’s sales strength, he said, stemmed from efforts the company made since 2014 to reduce inventory at its Toyota and Lexus brand retail stores, adding bloated inventories in general had helped create a "depressed sentiment" in the marketplace.

Toyota’s current sales strength reflects a slightly-better-than-expected sentiment of China’s overall auto market, according to analysts.

“Nothing really exciting, but there’s nothing to complain about,” Yale Zhang, head of Shanghai-based consulting company Automotive Foresight, said, referring to the market’s overall sentiment at the moment.

(Reporting By Norihiko Shirouzu in Beijing; Editing by Muralikumar Anantharaman)