Total new vehicle sales have continued to slide in key markets over the closing months of 2002, and few expect the global economic decline to lift anytime soon. Yet Japanese manufacturers such as Toyota have somehow managed to find increased market share. Toyota’s competitive line up, cost cutting efforts and reputation for reliability should see it continue to profit while others struggle.
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Japan’s biggest car maker, Toyota, is forecasting a dramatic rise in sales for 2003 after winning increased shares of the major US, European and Japanese markets during 2002. Toyota expects to grow total vehicle sales by 5% next year, equating to an increase from 6.5 million vehicles to 6.17 million.
Grumblings have been heard from Detroit for some time as US manufacturers feel the pinch of changes in the global economy. In November, Ford and GM executives estimated that the weak yen had handed their Japanese competitors a 30% profit advantage, helping create a fertile environment for Japanese exports. For Toyota, which now commands 10.5% of the US market, it has helped bolster its already strong position in North America.
But the state of the yen is not the whole story. Japanese car makers argue that desirability, build quality and cost cutting are what lie behind their improved market share. In fact, even in its stagnant home market, Toyota has performed well, expecting a slight rise in demand during 2003.
To maintain its momentum in North America, Toyota has adopted a dual track strategy, underpinned by increased production capacity at new manufacturing facilities in Mexico. At the same time, it has introduced new models under its high-end luxury Lexus brand.
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By GlobalDataIn Europe, a major target market for the Japanese brand, Toyota has reported record sales for the fourth consecutive year, enabling it to report its first operating profit for the region. Along with its competitive product portfolio the company has recently introduced cost cutting measures, which have boosted its profit margins. Toyota now claims around 4% of the European market and is aiming for 5% before 2005.
While its competitors struggle in the face of a weak global economy, Toyota’s focus on the basics is allowing it to profit at their expense and should see sales continue to climb next year.
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