Toyota Likely to Lower U.S. Forecast; Mississippi Plant Delayed

Toyota Motor Sales U.S.A. Inc. once again is likely to lower its sales forecast for 2008, as parent Toyota Motor Corp. reports a quarterly net profit decline and forecasts its first annual earnings drop in seven years.

“We are thinking it’s going to decline a little,” Toyota Senior Managing Director Takeshi Suzuki reportedly says of the 2.64 million-unit U.S. sales Toyota was predicting for calendar 2008.

Late last year, Toyota called for about 3% sales growth in the U.S. in 2008 from 2007, when the auto maker delivered 2.620 million vehicles. Earlier this year, it revised the rate downward to just 1%-2%.

TMSUSA spokesman Mike Michels supports Suzuki’s contention U.S. sales will fall and adds in-house analysts currently are compiling a revised forecast that should be available by Toyota’s May U.S. sales call.

“The market is a challenge and we’re not immune to what’s going on now,” Michels tells Ward’s.

TMC today predicted North American sales would fall 6.4% to 2.77 million units in the current fiscal year, which began April 1. Toyota sold 2.958 million units in North America for the fiscal year ended March 31, below a forecast of 2.97 million.

Toyota says Highlander production to begin few months behind earlier target.

Meanwhile, Suzuki tells Bloomberg the auto maker will delay Highlander cross/utility vehicle production at its plant currently under construction in Blue Springs, MS.

Toyota U.S. manufacturing spokesman Mike Goss tells Ward’s the delay will be slight, pushing the launch back from late 2009 to spring 2010.

“We have always said (we’d begin production) by 2010, and we are starting in spring 2010,” Goss says. “So I’m sure what Suzuki was referring to was they were considering starting up in late 2009…but now we’re confirming spring 2010.”

Goss says the revision accommodates a mid-cycle refreshening scheduled for the Highlander in 2010, thus preventing a near-term tooling changeover once the plant has begun production.

“Instead of starting out building the model (in late 2009) and having to make the change (in spring 2010), we’ll start production” with the refreshed model, he says.

In the January-March period, Toyota’s net profit fell 28% to ¥316.8 billion ($3.1 billion) as sales in the U.S., its most profitable market, slowed.

As Ward’s reported last week, Toyota deliveries have fallen or been flat in the U.S. for the last 10 months, a downturn that surpasses an earlier 8-month streak that stretched from December 1981-July 1982.

While sales of hybrid-electric vehicles have been strong and Toyota has struggled to meet demand for its Prius model, the auto maker has been hurt by the slump in sales of larger, less fuel-efficient pickups and SUVs. Light-truck models comprise a bigger portion of Toyota’s U.S. lineup then ever before.

Toyota blames some of the quarterly earnings drop on the strengthening yen. The auto maker has said every ¥1 gain vs. the U.S. dollar reduces its operating profit ¥40 billion ($385 million). The auto maker earlier this week said a recent round of price increases for its U.S. models was due to the strengthening yen.

Toyota forecasts a 27% decline in net profit for the current fiscal year to ¥1.25 trillion ($12 billion), with a 29.5% drop in its operating profit, to ¥1.6 trillion ($15.4 billion). It bases its fiscal 2009 assumptions on an exchange rate of $1:¥100, down from an earlier assumption of $1:¥114.

This contrasts with the fiscal year just ended, when Toyota’s net profit was up 4.5% to ¥1.72 trillion ($16.6 billion), a record amount, while net revenues also hit a new high, up 9.8% to ¥26.29 trillion ($253.5 billion).

“For this fiscal year, we posted our highest ever results in both revenue and profits,” TMC President Katsuaki Watanabe says in a statement.

Watanabe credits growth in emerging markets, most notably China, for the record results.

However, he warns of “a severe business environment” in the coming year, vowing Toyota will “aim to eliminate waste and review the process and structure of every aspect of our operations.”

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