Toyota plans aggressive recovery / Automaker aims to push hybrids, low-priced cars, new models

Nobuyuki Kojima / Yomiuri Shimbun Staff Writer


Toyota Motor Corp. is aiming to cement its recent recovery by aggressively pushing new models, hybrids and low-priced cars in domestic and foreign markets.

The auto giant is also rehabilitating its domestic business, which experienced a decline in profits due to the high appreciation of the yen.

On Thursday, Toyota revealed it expected a V-shaped recovery.

In regard to its fiscal 2012 operating profit--which has been sluggish since the 2008 Lehman Shock--Toyota said it expected to earn more than 1 trillion yen.

In addition to the 250 billion yen Toyota lost as a result of the yen's appreciation, the company's operating profits fell by 270 billion yen due to the Great East Japan Earthquake and massive flooding in Thailand.

However, Toyota was able to halt the decline in its profit margin during the first half of fiscal 2011 at 112.6 billion yen and secured 355.6 billion yen in operating profits.

President Akio Toyoda showed confidence in the results of the automaker's management reform at its earnings report press conference.

"Profits for [fiscal 2011] were not big. But we could have ended in the red due to the disasters and the super-strength of the yen," Toyoda said at the conference.

The company expects the disasters' effects on its profits will diminish in fiscal 2012.

It also expects sales of its hybrid cars will increase thanks to hikes in gasoline prices in the United States and a Japanese government subsidy program for eco-friendly car purchases.

In emerging nations experiencing rapid growth, such as China and Brazil, Toyota plans to start operating new plants by the end of this year with the aim of placing strategic, low-priced cars in those markets.

The company also plans to strengthen marketing strategies at home and abroad by successively selling new models with an eye to securing more than 1 trillion yen in operating profits.

If Toyota is successful, it would be the first time the automaker's annual operating profits exceeded 1 trillion yen since fiscal 2007.


Better days ahead?

Toyota maintains its domestic production target at 3 million vehicles, but its domestic operations, which are strongly influenced by the yen's appreciation, have been dragging on the automaker as it tries to return to profitability. However, a light is finally appearing at the end of the tunnel.

In fiscal 2011, the company posted an operating loss of 439.8 billion yen on a nonconsolidated accounting basis due to deteriorating export earnings.

The company's assumed exchange rate of 80 yen to the dollar in fiscal 2012 remains close to the 79 yen rate in the previous fiscal year. However, Toyota's deficit is expected to fall to 70 billion yen on a nonconsolidated basis.

The automaker is even aiming to turn a profit on a nonconsolidated basis in fiscal 2012 through measures to improve overall earnings, such as introducing an engine assembly line that can make a profit even at half production volume.

"With the yen remaining strong against the dollar, the company has been making tremendous efforts to improve earnings," Toyota Executive Vice President Satoshi Ozawa said.

However, even if the automaker achieved a consolidated operating profit of 1 trillion yen in fiscal 2012, that would still be lower than fiscal 2007, when it logged a record operating profit of 2.27 trillion yen.

The European financial crisis may flare up again, while the outlook for the U.S. economy remains uncertain. Also, the Chinese market may slow down. These factors may drastically reduce sales.

Under such circumstances, it is not yet known whether Toyota can fully return to a growth track.

(May. 11, 2012)