Mark Elias/Bloomberg News

Toyota Motor raised its sales forecast to 8.47 million vehicles for the year ending March 2007 and 9.8 million the following year, putting the company on track to become the world’s largest automaker.


The New York Times


November 8, 2006

Toyota Profit Jumps 34%; Sales Forecasts Are Raised

TOKYO, Nov. 7 — Toyota Motor’s profit for the last three months rose 34 percent, the company said Tuesday, as it released a forecast showing that it is on track to become the world’s biggest auto company as early as 2007.

Record sales in North America fed Toyota’s rise in profit during the quarter that ended in September. It grabbed market share from Detroit’s struggling auto companies with strong sales for its fuel-efficient vehicles like the RAV-4 sport utility vehicle, the Yaris subcompact and its Prius hybrid-electric vehicle.

Toyota officials raised their sales forecast for the fiscal year ending March 2007 to 8.47 million vehicles. They also said the company expects to sell 9.8 million vehicles in the fiscal year ending March 2008, with about 3 million of those sales coming in North America.

That forecast would easily put it ahead of General Motors as the world’s biggest automaker, and analysts say Toyota may pass G.M. next year or even later this year.

G.M. sold 9.2 million vehicles worldwide last year, but its sales and market share have dropped in 2006, when it has battled to bounce back from a financial crisis in the United States that has led to its latest revamping efforts. G.M. is expected to sell 9.2 million vehicles this year, but it has not issued forecasts for 2007.

On Friday, Toyota will dedicate its seventh North American assembly plant in San Antonio, where it is building a new, bigger version of its Tundra pickup truck that is set to be introduced early next year.

Toyota officials are also deciding whether to expand the San Antonio plant or build an eighth assembly plant in North America, as well as whether to build another engine plant.

Tennessee, Arkansas, Virginia and Mississippi remain the four leading candidates to land the new assembly plant, if Toyota decides to build it instead of expanding in San Antonio, people involved in the discussions said Tuesday.

American officials have not yet made a recommendation to Japan about a site for the plant. One factor will be the outcome of Tuesday’s elections, these people said, insisting on anonymity because of the confidential nature of the deliberations.

Toyota also is deciding whether to build another vehicle at its largest North American factory in Georgetown, Ky., where it produces the Camry sedan, the best-selling car in the United States.

The Georgetown factory recently began building a hybrid version of the Camry. It also produces the Solara coupe.

Officials at the Georgetown factory, which has already cleared space for a new model, hope Toyota will make a decision in early 2007, said Gary Convis, executive vice president of Toyota Motor Engineering and Manufacturing North America.

“We want to show Toyota we have the flexibility, the space, the intellectual property and the capability. We want them to say, ‘Kentucky can do that,’ ” Mr. Convis, who also is president of the Georgetown plant, said in an interview this week.

Among the possibilities, analysts said, is a crossover vehicle, perhaps even a car that Toyota has not yet announced. Another choice could be a model from Lexus, the top-selling luxury brand in the United States. Mr. Convis said: “I’d love to build a Lexus. Time will tell.”

Strong North American sales were one reason Toyota raised its worldwide sales forecast to 8.47 million vehicles from 8.45 million.

Toyota, Japan’s largest automaker, said a weak yen and cost cuts helped offset rising prices for steel and other materials, which have hurt other automakers’ profits. It said net profit in the three months through September rose to 405.7 billion yen ($3.45 billion), on sales of 5.83 trillion yen ($49.6 billion). The weaker yen makes exported cars more attractive overseas and dollar-denominated sales more valuable in Japan.

G.M. lost $115 million in the quarter, while the Chrysler Group, a unit of DaimlerChrysler, lost $1.5 billion. Ford Motor, meanwhile, lost $5.8 billion, its biggest quarterly loss in 14 years.

The strong gains came despite a spate of recalls that have dented Toyota’s reputation for sterling quality and forced the company to step up its efforts to eliminate defects. The quality problems have appeared as the company struggles to keep pace with surging global demand for its vehicles, analysts say.

“Our business is growing,” Takeshi Suzuki, a senior managing director at Toyota, said Tuesday. “Our biggest job now is to maintain quality and build cars that are competitive in price.”

Also Tuesday, Toyota announced it would buy a 5.9 percent stake in the smaller Japanese carmaker Isuzu for an undisclosed price, in an apparent bid to strengthen its position in fuel-efficient technologies. Toyota said the companies would jointly develop alternative-fuel engines as well as diesel engines. Last month, a rival, Honda, said it would develop a diesel engine that it planned to offer for sale in its cars.

Toyota reported strong gains in both the United States and Europe, where it expects to meet its 2010 sales goal two years early.

Toyota raised its full-year net profit forecast 18 percent to 1.55 trillion yen ($13.2 billion). The company also said it expected its annual operating profit, which reflects the earnings of its core auto business, to reach 2.2 trillion yen ($18.7 billion).

With a market value of about $214 billion, Toyota is by far the world’s most valuable auto company, worth more than the next three automakers — Honda, DaimlerChrysler and Nissan — combined. By contrast, G.M.’s entire market value is $19.6 billion.

Toyota said that its quarterly vehicle sales rose 19 percent, to 717,000 vehicles in North America. Unlike Detroit auto companies, whose lineups are still dominated by sport utilities and minivans, Toyota sells more cars than trucks in the United States. It reported strong demand for its RAV-4, Yaris and retro FJ Cruiser, an S.U.V. introduced this year.

Toyota and other Japanese automakers have been gaining market share in the United States.

Through October, Toyota’s American market share rose 2 percentage points, to 15.2 percent, putting it in third place, ahead of DaimlerChrysler. Toyota passed Ford in July to rank briefly as the market’s second-biggest auto company, behind G.M. Long term, it is likely to take second place as Ford cuts jobs and closes factories under an overhaul plan called the Way Forward.

In Japan, Toyota said, sales fell 1.1 percent, to 530,000, for the quarter, reflecting the shrinking size of that nation’s mature auto market. Global sales rose 8.5 percent, to 2.05 million vehicles, Toyota said. The automaker has said it will expand or build factories in China, Russia and Thailand.

Martin Fackler reported from Tokyo and Micheline Maynard from Detroit.