Bloomberg News

Toyota Raises Sales Forecast, May Extend Lead Over GM, VW

August 03, 2012

Toyota Profit Beats Estimates After Sales in U.S., Japan Surge

Toyota, plagued by natural disasters in 2011, outsold General Motors Co. and Volkswagen AG to lead the industry for second straight quarter as sales surged in Japan and the U.S. Photographer: David Paul Morris/Bloomberg

Toyota Motor Corp. (7203), which outsold General Motors Co. (GM:US) and Volkswagen AG (VOW) for two straight quarters, may extend the lead after the Japanese carmaker raised its sales forecast for 2012.

Sales -- including those of its Daihatsu Motor Co. (7262) and Hino Motors Ltd. (7205) units -- may rise 23 percent to a record 9.76 million units in 2012, Toyota said today, raising an earlier target of 9.58 million. It also reported net income jumped to a four-year high last quarter, a day after GM posted a 38 percent profit drop. Wolfsburg, Germany-based VW last week reported operating profit growth slowed.

“Toyota’s got a fair lead, and it’s going to be a tough act for the others to make up for it in the second half,” Ashvin Chotai, London-based managing director at Intelligence Automotive Asia, said by phone today. “This particular year, it looks like Toyota has pulled ahead impressively.”

Toyota, plagued by natural disasters in 2011, benefited as the Prius hybrid helped sales almost double in Japan, while demand for the Camry continued to exceed that of any car in the U.S. The company, led by President Akio Toyoda, is now counting on the U.S. demand to help sustain earnings growth as analysts project Japan sales to slow after government subsidies run out later this year.

“Toyota’s previous forecasts may have been conservative, but when all the companies are becoming cautious with regard to the economy, I find it peculiar” Toyota is raising their projection, said Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. “If you think about the global economy, we’re not in a situation where you can expect lots of car sales.”

Sales Horserace

In the first six months of 2012, Toyota’s sales rose 34 percent to 4.97 million globally, leading Detroit-based GM by 300,000 and VW by 520,000 deliveries. GM global deliveries rose 2.9 percent to 4.67 million during the first half while VW sales increased 8.9 percent to 4.45 million, according to the companies.

Toyota rose 0.7 percent to close at 3,065 yen before the earnings announcement, extending this year’s gain to 19 percent in Tokyo trading. Still, the stock has surrendered about half its gains since the end of March after the yen turned into the best-performing major currency from the worst performer within a quarter.

Beating Estimates

Net income reached 290.3 billion yen ($3.7 billion), or 14 percent higher than the average of seven analysts’ estimates compiled by Bloomberg. While earnings improved across most major regions in line with expectations, operating income in Japan surged to more than double analysts’ estimates. Revenue climbed 60 percent to 5.5 trillion yen and the maker of the Corolla compact sedan, the world’s best-selling car, also said it plans to produce a record 10.05 million vehicles in 2012.

In the U.S., April-to-June deliveries increased 48 percent to 558,812 vehicles, helped by sales of the best-selling Camry sedans, Corolla sedans and Prius hybrids as Toyota led the Japanese auto industry’s recovery from last year’s production disruptions, according to data compiled by Bloomberg.

In Japan, Toyota’s deliveries almost doubled last quarter, led by the Prius hybrid, as pent-up demand and government subsidies for fuel-efficient cars helped spur demand. The Japanese market, recovering from last year’s earthquake and tsunami, expanded 54 percent in the first six months of 2012. That’s the fastest growth among the world’s biggest automobile markets, according to data compiled by Bloomberg.

Japan Surges

Toyota generated profit from Japan for a second-straight quarter after posting eight consecutive quarters of losses. Operating profit at home was 107.1 billion yen, trumping the 47.3 billion yen average analyst estimate.

Growth in Japan may slow after the budget for government subsidies runs out as soon as this month, according to Koichi Sugimoto, a Tokyo-based analyst at BNP Paribas SA. (BNP)

Operating profit from North America quadrupled to 117.6 billion yen last quarter. That compared with the 115.5 billion yen average estimate of three analysts surveyed by Bloomberg.

In July, Toyota’s U.S. sales rose 26 percent and the company is ahead of its full-year target of 15 percent growth. Industrywide sales of light vehicles in July grew 8.9 percent to 1.15 million units, according to researcher Autodata Corp. The improvement, buoyed by gains at Japanese carmakers, means the industry’s is headed for its biggest number of annual deliveries in five years.

U.S. Momentum

Toyota expects industrywide deliveries to reach about 14.3 million in the U.S. this year, and for “the momentum that was generated through the first six or seven months” to continue through the rest of this year, Bill Fay, group vice president of U.S. Toyota-brand sales, said this month.

In July, Toyota led full-line automakers by reducing spending on discounts and promotions in the U.S. by 24 percent to $1,849 per vehicle, according to Autodata estimates. For the quarter ended June 30, it increased incentive spending 4.2 percent, according to Autodata.

In Europe, where the main auto association is predicting the market to shrink to the lowest since 1995, the company posted profit of 3.4 billion yen, shy of the 4.18 billion yen average estimate. Toyota trimmed its fiscal-year sales forecast for the region by 3.5 percent to 830,000 vehicles and Senior Managing Officer Takahiko Ijichi said the outlook for Europe “continues to look tough.”

Europe Demand

Toyota is less reliant on European demand than companies such as PSA Peugeot Citroen (UG) and GM, making the Japanese carmaker less vulnerable to the region’s debt crisis. Toyota, which estimates its European market share to have been about 4 percent in 2011, accounted for about 10 percent of global sales last year, according to data compiled by Bloomberg.

GM reported yesterday that second-quarter profit slid 38 percent as losses widened at its Opel unit in Europe.

Profit from Asian markets outside of Japan -- including China and India -- rose 69 percent to 101.5 billion yen, compared with the 104.1 billion yen average analyst estimate.

Total wholesale deliveries of passenger vehicles in China may rise 11 percent to 16.09 million units in 2012, according to the China Association of Automobile Manufacturers.

Toyota revised its exchange-rate assumptions for the euro, projecting Europe’s common currency to trade at 101 yen in the fiscal year, compared with an earlier forecast of 105 yen. Toyota kept its estimates for the dollar unchanged at 80 yen.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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