Toyota's luxury brand Lexus could soon be rolling off production lines in China. Either top end brands from Audi to BMW already run factories on the, Mainland came to tap into the world's largest car market. But Toyota has hesitated over Lexus for years not willing to risk quality, or share profits with a Chinese partner.
Today, Lexus lags its German rivals selling only a 130,000 vehicles here last year compared to over 600,000 for Mercedes-Benz. Reuters Norihiko Shirouzu says the company is now re thinking it's strategy.>> According to people inside Toyota and Lexus two things changed. One is better ties between Japan and China which gives them sort of optimism for a better economic time in China.
And second reason is that China has moved to scrap foreign ownership restrictions. So it give them hope to possibly own 100% of their investment.>> China will lift the restrictions for electric car makers this year, and for others by 2022. For Lexus it maybe a chance to boost sales in China, the new policy means the company could avoid import duties and cut costs, bringing down the retail price.
But nothing is set in stone just yet.>> They can try to own 100% of their investment with Lexus in China by producing electric cars only. If they choose to sell gasoline cars, then they have to wait till 2022, and that's not even guaranteed.>> Critics inside the company say Lexus should stick to importing cars to China.
There is also the enormous challenge of building a factory from the ground up. But analyst say that if Lexus wants to start closing the gap with its rivals, then setting up in China is exactly the right move.