The biggest global automakers are having a terrible time in the world's largest market with one notable exception: Toyota.
Car sales in China fell last year for the first time in about two decades. GM was down 10%, Ford plunged 37% while Volkswagen just about held its ground. Sales of Toyota vehicles, however, surged 14% to almost 1.5 million.
The Japanese company's strength in China has helped offset a poor performance in the United States, where its sales are declining. And it's predicting further growth in China this year.
The Chinese market is crucial for the auto industry. Global car brands have come to depend on blockbuster sales to millions of Chinese consumers who are using their growing wealth to buy a first car or upgrade. But the removal of subsidies, an economic slowdown and a trade war with the United States dragged down demand last year.
Toyota has bucked the trend thanks to a combination of factors, analysts say, including the company's intensified focus on the Chinese market, new tariffs that have hurt some of its rivals, and its stable of hybrid vehicles.
Trade war winner
As the trade war erupted last year, China hiked tariffs on vehicles made in America, while cutting them on those imported from Japan and Europe. BMW and Daimler, the owner of Mercedes Benz, which ship high-end vehicles to China from their US plants, warned last year that the new Chinese tariffs were hitting their profits.
China has since lowered tariffs on US-made vehicles while it tries to negotiate a deal with the United States, but experts say that the uncertainty from the trade war has already boosted Toyota. Sales of the company's premium Lexus cars, which are built in Japan, have been gaining momentum in China.
"Consumers need some alternative, of which Toyota is one of the more attractive options," said Mio Kato, founder of Tokyo-based equity research firm Lightstream Research.
Toyota did better last year than other Japanese carmakers. Nissan's sales in China rose just 3%, while Honda's slipped 1%, according to data provider Marklines.
That's partly because Toyota is playing catchup in the world's number two economy, Kato said. It sells about half as many cars in China as GM. The Japanese company has historically prioritized the United States, its biggest international market, according to analysts.
Toyota now appears to be stepping up its game in China. Bloomberg reported last year that Toyota is aiming to triple its car production in the country in the coming decade, a target the company hasn't confirmed publicly.
The Chinese government's big push to get more electric vehicles on its roads as it battles air pollution and carbon emissions has helped Toyota, according to analysts. China is the world's biggest market for electric vehicles, accounting for about half of global sales.
Toyota has been pushing sales of its hybrid-engine vehicles, which are proving popular with Chinese drivers who can't yet afford to switch to a fully electric car.
The Chinese government has also realized that in order to meet its vehicle emissions targets, it can't rely on electric vehicles that run purely on batteries, analysts say. Hybrids are generally cheaper to buy than battery-only cars and don't face the same worries from consumers about their driving range.
"Government backing for hybrid vehicles in China is likely to make things much easier for Toyota and give the company a significant leg up on the competition," Kato said.