Toyota Motor Corp. (NYSE: TM) rolled out its 2012 model Camry in Japan yesterday. For the Japanese market, the carmaker will sell only the gasoline-electric hybrid. That puts the company on par with Honda Motor Co. (NYSE: HMC) which only sells a gasoline-electric version of its Civic in Japan.

Toyota has also announced that it will stop exporting Japan-built Camry sedans to the US and begin to produce all of the cars in the US. The decision has less to do with US know-how and more to do with the unfavorable currency exchange rate between the yen and the dollar.

Perhaps the most interesting move, though, is one that the company is not making. Unlike Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM), Toyota has no plans at present to introduce all-electric cars in China. The company is wary of Chinese regulations that require non-Chinese automakers share technology with their Chinese partners.

GM, which hopes to qualify its all-electric Volt for the generous subsidy the Chinese government pays to purchasers of electric vehicles, is reluctant to offer up its latest and greatest technology in exchange for access to the market. Ford has already agreed to China’s demands for the technology transfer, but so far has limited electric car-building to small projects and has not announced any plans yet for commercial sales.

Toyota’s approach to the Japanese market threatens to leave it at a disadvantage in the world’s largest market for automobiles. Chinese consumers bought 17 million cars last year, virtually all of them gasoline-powered.

Domestic Chinese carmakers like BYD Co. (OTC: BYDDF) have not succeeded either in selling all-electric vehicles like BYD’s e6 in China. BYD, in fact, has suffered a sales decline this year that is expected to get worse before year-end. Second quarter sales of BYD’s F3DM hybrid and its all-electric e6 totaled just 480 units. Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A, BRK-B) owns a 10% stake in BYD.

What non-Chinese carmakers fear is that the technology transfer rules will lead to a result like that which lured wind power provider Vestas Wind Systems A/S into China only to see the technology transfer requirement lead to a Chinese wind turbine industry that eviscerated Vestas’s profitability. The World Trade Organization, of which China is a member, does not permit the sort of technology transfer rules that China has adopted, but WTO regulations have little impact on China’s determination to do whatever it wants.

Toyota still faces a number of challenges following last year’s recall issues. Figuring out a way to get into the Chinese market without giving up the family jewels is just the largest challenge.

Paul Ausick

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