Toyota is expecting to make a loss in North America even as it anticipates selling more cars in the United States than the restructured General Motors, a senior executive has said.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
New chairman and CEO of Toyota Motor Sales USA, Yoshimi Inaba, hopes the company’s North American operations can return to profitability during its next fiscal year, which begins in April 2010.
“It’s a challenge. I guess I’ve just set myself a very big goal,” he said during a meeting with reporters in Detroit.
“Our strength is our ability to meet local needs. I don’t see how Toyota can be profitable again without being profitable in North America.”
According to AFP, Inaba said it was quite likely that Toyota could emerge as the top car seller in the United States if the predictions that General Motors is destined to lose market share after shedding brands and downsizing operations prove accurate.
“Toyota tried very hard to become number one” globally as it doubled sales world wide in the last eight years, but is not actively working to surpass GM in the United States, he said.
“It’s not that we want to be number one (in the United States), it’s because of how things worked out,” he told Reuters.
Inaba cautioned that Toyota’s rapid growth also came at a price, leaving the Japanese auto giant vulnerable when sales dropped simultaneously in the United States, Japan and western Europe.
He was confident the US market would recover from its current slump, but cautioned that it would take time.
“There is a little pulse in the market. The market can’t get any worse,” he said.
The fundamentals of the US economy – and its lack of sufficient public transportation – mean that auto sales will eventually return to their previous highs, he said.
“We can still be very excited about this market,” he said.
However, Inaba cautioned that Toyota was facing stiff competition from Hyundai, Ford and other automakers.
“We see what many, many of our competitors are doing,” Inaba said. “They are doing a good job of catching up.”
Inaba also said Toyota wanted to increase the share of its vehicles sold in the US market that are manufactured in North America from the current level of nearly 60%, according to Reuters.
That could happen in part by bringing production of the Prius hybrid or Scion or Lexus models to the United States, he said. Currently Toyota imports most of those vehicles from factories in Japan though one Lexus SUV is assembled in Canada and there has been talk of building the Prius at an uncompleted plant in Mississippi.
Inaba, a veteran of Toyota’s operations in Japan, the United States and China, retired in 2007 but was brought back as part of the management team installed by Toyota’s new president, Akio Toyoda, about a month ago.
As part of an effort to reduce costs, Inaba said Toyota would be looking to build more models on a single assembly line while increasing the share of its production at US factories to protect Toyota’s results from the impact of a strong yen.
Inaba also said there were signs that the US auto market was stabilising after a brutal four-year downturn, including increased customer traffic at dealerships that he called a “pulse of improvement.”
He said it was likely that US auto sales would push back above an annual rate of 10m units by the end of 2009 and be above 12m in “a couple of years.”
He said it remained uncertain when the US market could return to the stronger sales rates above 16m seen earlier this decade.
“I came in at the best time in that the market cannot get any worse,” Inaba told Reuters.
As of Thursday, Toyota had an inventory of 36 days supply of sales of vehicles on dealer lots. The total includes 33 days supply for trucks such as the Tundra pickup truck and 45 days for cars.
Inaba said those inventory levels had become so low that dealers were reporting difficulty getting vehicles they need and said that gave Toyota room to increase production.
