Japanese automaker Toyota seems to be wary of the slowdown in the Chinese economy, as reports say the company is likely to delay building its premium Lexus brand in the country for at least a few years.
Reuters reported that slow growth in China's auto market and lower manufacturing costs at its home country are prompting Toyota to delay its plans for a new assembly line.
The company now thinks that the sale of Lexus branded vehicles in China should be increased to above 100,000 per year before it invests hundreds of millions of dollars in a new facility there, two company executives told Reuters.
In addition, the Chinese government's requirement for foreign firms to establish a joint venture with a local partner to make and sell vehicles in the country is also holding back Toyota from the plans, as it is reluctant to share control of the Lexus business.
"Toyota's committed to China, and we will eventually start producing Lexus cars here. There's no doubt," one of the executives told Reuters. "But we need to do a few things before we take the plunge."
Toyota has been looking to build an assembly line, producing the Lexus ES sedan or the RX crossover sport-utility vehicle in China.
However, a significant growth slowdown in China's auto market, which grew just 1.4% in the first half of 2015 in line with the country's economic growth, is forcing Toyota to wait for signs of improvement.
In addition, the yen's persistent weakness is helping the company produce cars cheaply at home.
Meanwhile, Toyota's rivals such as Nissan's Infiniti, Jaguar Land Rover and General Motors' Cadillac have decided to go ahead with plans to begin production in China.