Toyota Suffers First Sales Declines in Seven Years

Toyota sees first output fall in 7 years, cuts '08 forecast
29 Jul, 2008, 0141 hrs IST,
The Economic Times

TOKYO: (Reuters) Toyota Motor on Monday cut its 2008 groupwide global sales forecast by 3,50,000 units to 9.5 million vehicles due to a pronounced downturn in the US market, in a rare setback for the world’s biggest automaker. The weaker sales outlook also means global production at the parent company would fall 1% from 2007 to 8.43 million vehicles, marking the first decline in seven years.

Toyota’s revision underscores an ever-toughening environment for global automakers faced with falling demand for cars, especially higher-margin, bigger vehicles amid rising gasoline pump prices. Profits are already under severe pressure as prices of steel and other raw materials continue to climb, while tightening environmental regulations raise the cost of research and development.

Analysts said the sales revision was expected after a weak performance in the year to date, particularly in the US, but one raised concerns about a possible profit warning when Toyota announces its April-June results on August 7.

“Toyota typically doesn’t alter its forecasts at the first quarter, but after a revision of this scope there’s always an off chance that they’ll lower their earnings outlook,” said Credit Suisse auto analyst Koji Endo.

Hit by a demand meltdown for pickup trucks and large sport utility vehicles in the United States, Toyota cut its parent-only sales forecast there to 2.44 million vehicles from the 2.64 million it announced in December. The new projection would represent a 7% fall from 2007. — Reuters

Toyota’s initial global sales plan called for sales at the group, which includes truck unit Hino Motors and minivehicle maker Daihatsu Motor, to grow 5% to 9.85 million vehicles this year. Overall sales forecasts did not change at Hino and fell only 10,000 units at Daihatsu. Toyota was responsible for the rest of the undershoot. Global sales are now expected to rise just 1%, likely keeping Toyota ahead of General Motors as the world’s biggest carmaker.

Industrywide US vehicle demand has taken a sharp turn for the worse in the second quarter of this year, prompting many automakers and forecasters to revise their 2008 sales outlook by around 1 million vehicles compared with even some of the more sober views at the beginning of the year....