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GENEVA INTERVIEW: Toyota Europe CEO eyes sales and profitability gains in 2012

By Dave Leggett | 9 March 2012

Didier Leroy

Didier Leroy

Toyota Europe President and CEO Didier Leroy tells just-auto that Toyota Europe has become profitable ahead of schedule after last year's reorganisation and that he is expecting higher profits and sales in 2012, despite a 'difficult' market.

Leroy maintains that the reorganisation of Toyota last year has left it more agile and leaner, with Europe becoming the global planning centre for the A-(Aygo), B-(Yaris) and C-segments (Auris and Verso).

“For these segments, our voice [Toyota Europe] leads the way in which Toyota wants to develop these cars in the future. These vehicles are at the heart of the European market and business.”

He also says the European organisation is tasked to work closely with European suppliers and technology leaders for the benefit of Toyota worldwide.

“We want to match the best of the Japanese technology with the best from some very strong European suppliers.”

Leroy describes a reorganising process that began formally in April of last year and that will culminate in the design and engineering of European models being fully developed under the new organisational structure by 2013.

He also points out that the European organisation was taking decisions on business reform from the middle of 2010 in order to improve the unit's loss-making financial position.

“Initially the plan was to not lose money [return to breakeven] within five years, starting from 2010. We decided that we could not accept a plan that is to lose money for the next five years and we therefore decided to start business reforms.

“The first step was to reduce losses in 2010 [the fiscal year ended March 2011]. For fiscal year 2011, we wanted to achieve free cash-flow and for fiscal year 2012, the [new] target was to be profitable.”

Leroy says that Toyota Europe has been performing ahead of plan and managed to make money in fiscal 2010 (EUR113m) and that is continuing in the current fiscal year.

“This year, fiscal year 2011, in the first nine months, we were profitable by EUR76m,” he says. “That compares with a loss of EUR59m in the same period of the previous year. There has been a big improvement in profitability. This year we will be much more profitable than last year in terms of consolidated business operations in Europe.”
 
What about assumptions concerning the car market environment in Europe during 2012? Leroy says that Toyota has been planning on a decline of 5% in the West European market for fiscal 2012, while the Central and Eastern European market remained broadly stable. That assessment has recently been revised after January and February's market numbers.

“The West European car market is looking worse than that,” Leroy maintains. “But the market in Central and Eastern Europe is a little better than we thought. So overall, it is still in line with our plan.”

Leroy is upbeat about Toyota's prospects in Europe based on new model introductions (the Yaris Hybrid, Prius + and GT 86 were on show in Geneva), a lean organisation and a manufacturing footprint (albeit a relatively modest one) devoid of excess capacity.

“We do not have any stock problem in Europe, at all,” he says.

“Two years ago we sold 808,000 units in Europe. Last year it was 822,000. Our plan this year, even with this very difficult market condition, is to achieve 835,000 units in Europe. We are quite conservative. We know it is a difficult market, that our competitors will be aggressive because they have excess capacity and stocks. We want to continue to grow and we will grow in a profitable way. We will not push cars to the market and the business of Toyota in Europe in 2012 will be fully profitable [both automotive operations and financial operations].”