Toyota stock falls as China sales drop on fuel price surge

Investing.com - Toyota Motor (NYSE: TM) reported a 23% decline in China sales for August, marking the seventh consecutive monthly drop as rising fuel prices drive consumers toward electric vehicles.

The world's largest car manufacturer sold 927,866 vehicles in China during the first eight months of the year, down nearly 19% from the prior-year period. The prolonged slump represents the most severe downturn for Toyota in the Chinese market in at least a decade. The Middle East conflict has contributed to soaring fuel prices that have weakened demand for petrol and hybrid vehicles.

Toyota's local joint venture partner GAC announced Monday an agreement to acquire a 50% stake in FAW Toyota, its other joint venture in the country. The Japanese automaker is shifting to a "China-for-China" model that uses more Chinese parts and technology suppliers. Battery electric sales in China rose 36% in August.

China's overall auto sales have shrunk 21.8% this year to 13.4 million units, with combustion engine sales declining more sharply than electric vehicles. The sales slowdown has also affected German manufacturers Volkswagen, BMW and Mercedes-Benz this year, prompting them to cut annual forecasts. Honda's China sales drop has been more severe, slumping by about three-quarters in July and August compared with the same period last year.

The China sales decline contributed to a 3.6% drop in Toyota's global sales in the year to date to 6.6 million vehicles. Toyota shares have fallen 15% this year as the stronger yen has weakened earnings prospects along with the China market downturn.

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