Toyota Reaffirms Emphasis On Hybrids, Compacts

By dancurranjr On February 7th, 2009

prius-flamesToyota’s ascension to the world’s largest automaker, over General Motors, has come with its first fiscal-year loss in nearly six decades. The company sold 1.84 million vehicles worldwide in the third fiscal quarter from October to December, or 443,000 fewer vehicles during that time than it did during the same quarter last fiscal year.Now, faced with big losses, the auto giant Toyota is revising downward its predictions for the full fiscal year ending March 31. Toyota predicts that total vehicle sales will be 7.32 million units, which would be 220,000 fewer vehicles than the company had forecast in December.

The company expects a roughly $3.9 billion loss for the quarter, three times what it had told analysts and investors to expect late last year. The company said full-year losses will be $5 billion, versus the $1.7 billion it had predicted.

In a release, Toyota EVP Mitsuo Kinoshita said the company is responding by developing a new product line-up “that responds to the customers’ requirements in each region. For the mid-term, we plan to enhance the development of hybrid and compact vehicles, which we believe are the key to our future growth.”

The next-generation Prius will launch in May, followed by Lexus’ first exclusively hybrid vehicle (rather than a hybrid version of a traditionally powered car), the HS250h this summer. “We are also thoroughly reviewing our entire business to reduce costs across the board. … in the areas of research and development, and production and sales operations.”

For Toyota’s big losses for the third fiscal quarter — ¥4.8 trillion, a 28.4% decline versus the same period last fiscal year — Kinoshita blamed revenue and profit declines on poor sales in the U.S. and Europe, and the appreciation of the yen against the U.S. dollar and the euro. In North America, Toyota sold 521,000 Toyota, Lexus and Scion vehicles, a decrease of 235,000 units. In Europe, vehicles sales were 235,000 thousand units, 73,000 fewer vehicles than the period last year.

Adolfo Laurenti, senior economist at Chicago-based Mesirow Financial, says Toyota’s dour news does not translate to good news for Detroit. “The important point is that the loss in sales is nothing specific about Toyota and other automakers; it’s a reflection of market weakness,” he says.

“The problem is that the economic fundamentals are so bad everyone is suffering, but Toyota does not have much to change, because their mix of cars seems to be right. When the economy bounces back they will have the right mix.

“They have a strong reputation, and they have lower cost structure because they operate in the South; they don’t have additional costs associated with unions, and they don’t have legacy costs. In that sense they are much more flexible which means they have the flexibility to react more promptly to market changes and more leeway in their balance sheet.”

Source: MediaPost News

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