One insider of FAW Toyota told First Financial Daily that the company will produce 15,000 fewer vehicles in April than the 50,000 vehicles produced in March. Production will be reduced by 30 percent to 35 percent.

Production cuts in May will be even greater. Toyota is expected to cut 20,000 vehicles, including cuts to production of Corolla, RAV4, Reiz and other popular models.

Affected by the recall of the RAV4 model, sales of FAW Toyota vehicles on the terminal market is poor. Dealers' inventories have reached the highest level since last year. At one point, FAW Toyota dealers in Guangzhou ran out of room on their lots, and there was no place to park new arrivals.

In order to speed up cash flow, prices at dealers across the country are set to fall. Even RAV4, which was launched last year, cut prices by several thousand yuan. Dealers said that after the capacity adjustment, the car manufacturers mentioned no clear requirements in these two months, and dealers can focus on dealing with inventory, while prices will be up.