Japanese carmaker Toyota Motor Corp is expecting the auto market in United States to move towards a soft recovery in this year, irrespective of the poorer sales than expected in the previous month. However, there are concerns surrounding Toyota’s sales even as it is facing increased competition and it braces up for eroded profits in one of its largest markets.
World’s top selling automaker Toyota raised its forecasts for operating profits to a new high of 2.4 trillion yen for the year ending March and predicted that the industry-wide sales in US would stand at nearly 16 million cars in the year 2014 as opposed to 15.58 million cars sold previous year. Toyota is already facing several uncertainties in the developing markets, which make up for a staggering 45 percent of its total sales. Also, it is also facing the brunt of narrowing of the economic stimulus package which is granted by the U.S. Federal Reserve.
Takumi Hoshi, an auto industry analyst working at Toyo Securities is of the opinion that since downside perils are very much present in developing markets like the ‘fragile five’, including Brazil and Indonesia, the way Toyota’s car sales go in advanced markets will be significant for it to keep its profit margins strong and robust in the coming times.
Toyota has enough room for boosting its profitability in the northern American region. Here, the carmaker’s operating margin stood at 5.2 percent in October-December and this was below the 9.1 percent operating profit margin for the global business. However, Toyota is aware that competition is stiffening on North America, which makes up for almost 30 percent of the company’s global car sales and nearly 15 percent of the company’s operating profit.
The Camry remains the mainstay for Toyota in the US markets and its sales here are facing tough competition from the likes of Honda’s Accord and Ford’s Fusion. Sales of Camry dipped by 1.1 percent during the last quarter in the previous year. In the financial year leading up to March, the Japanese carmakers has brought down its sales forecast for North America by 1.1 percent and are predicting the sales to stand at 2.6 million cars. It also has blamed its comparably weaker lineup for its pickup trucks as against the Detroit’s Big Three. The frosty temperatures prevailing in a major part of the United States are also blamed for a pronounced slowdown in manufacturing activity in US in the month of January. Around the world, share markets were hit badly after the date was revealed, with rising concerns that fresh signals of US economy stumbling.
As Toyota raised its operating profit predictions, it is certainly a good sign as it has moved finally above the pre-Lehman forecast levels even as the yen’s weakening in the last year has propelled the profit margins for its export business. For the October-December period, the Japanese automaker registered an operating profit figure of 600.5 billion yen almost five times that of their operating profit in the previous year.
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