[Digital Today reporter Jae-won Choi] Toyota's China joint venture FAW Toyota has officially denied reports of steep price cuts and a withdrawal from the China market.

Electrek reported on Oct. 6 that FAW Toyota said recent online claims of a "complete withdrawal from the China market" and "large-scale discount sales" were not true. The company said production and sales of all models and plans to develop follow-up models were proceeding as scheduled. It stressed that it reserves the right to take legal action over false information.

The controversy flared after Guangzhou Automobile Group (GAC) on Sept. 28 disclosed a restructuring plan in which it would acquire the 50 percent stake in FAW Toyota held by FAW. GAC is pursuing a plan to issue new shares at 5.75 yuan per share (about 1,150 won) to buy the stake, with FAW becoming GAC's second-largest shareholder after the deal. The transaction terms will be finalised after an audit and asset valuation.

FAW Toyota is a joint venture in which FAW and Toyota affiliates each hold 50 percent. If the deal is completed, GAC will take over FAW's stake while Toyota will keep its 50 percent. That has led to speculation that Toyota could link more closely the operations of FAW Toyota and GAC Toyota that it has run in China.

After the stake reshuffle was announced, some Chinese online media and local social media spread claims that FAW Toyota would sharply cut prices to reduce inventory and ultimately exit the market. The company issued a statement on the night of Oct. 5 to directly refute the reports. It said it would continue developing new models by using the group's resources and technology.

Toyota sells Corolla, RAV4 and Avalon, as well as electrified models such as the bZ3 and bZ5, in China through FAW Toyota and GAC Toyota. But Toyota and Lexus sales in China fell about 23 percent in August from a year earlier, extending declines to 7 consecutive months. With competition intensifying from Chinese electric vehicle makers, attention is on whether the stake reshuffle will lead to greater efficiency in Toyota's China operations.