Toyota Plans To Surpass Ford as World's Number Two Carmaker In 2004

NAGOYA, Japan, Dec 18, 2003; Chang-Ran Kim writing for Reuters reported that Toyota Motor put out bullish forecasts on Thursday, projecting record sales of above seven million units for 2004 – a level that would likely catapult it above Ford Motor as the world's No.2 auto maker.

Toyota has made huge advances in the lackluster global auto market this year, grabbing from its rivals a bigger share in all major markets -- the United States, Europe and Japan -- with an abundance of new and competitive products.

Ford along with the other "Big Three" U.S. auto makers -- General Motors and Chrysler, the U.S. arm of DaimlerChrysler AG hs been at the receiving end of that assault.

While Ford has not projected sales for all of 2003, a sum of its sales in the first nine months and production plans for the final quarter would put it behind Toyota by about 400,000 units.

Toyota estimated sales at its group, which includes minivehicle maker Daihatsu Motor and truck maker Hino Motors, would total 6.78 million units this year, and forecast a four percent rise to 7.08 million vehicles in 2004.

But President Fujio Cho had only his characteristic modesty to offer when asked about the prospects of overtaking one of the world's oldest auto makers.

"I have no idea what Ford's numbers are going to be this year or next year, but my impression is that it is running way ahead of us. It would be impertinent for us to talk about overtaking them, and those are my true feelings," he told a news conference.

But Toyota, unlike struggling Ford, has plans to keep its engines running at full throttle in the coming years, with expansion planned in almost every corner of the world.

In 2004 alone, it will launch the new Scion brand across the United States to tap a growing demographic of young customers, add output capacity in Britain and France, and begin production of the high-volume Corolla sedan in red-hot China, for starters. Growth will continue in 2005, with the start of the Alabama, Czech and Tianjin plants, while it will also bring the Lexus luxury line to Japan.

While Toyota is still well behind GM in sales volume -- the U.S. giant sold 6.4 million vehicles in the first nine months alone -- its expansion has come with a similar rise in profits, unlike at GM, which has been making up for weakness in the auto-making business with profits in financing and other areas.

FEAR FACTORS

Toyota's march would come against a backdrop of little or no growth in the world's biggest markets.

In 2004, it expects overall Japanese auto sales, excluding 660cc minivehicles, at around 4.1 million units -- only 50,000 units more than this year.

And while it expects a nascent economic recovery to boost U.S. demand to up to 17 million units next year from around 16.6 million this year, it noted there were external factors such as the fragile political climate in Iraq and currency swings that could weigh on sales.

"For now, it seems the world economy is improving, and we basically expect that to continue," Cho said. "But with the SARS virus cropping up again and the situation in Iraq as yet difficult, there are still many fear factors."

Still, Toyota noted it looked set to reach its sales targets of two million units in North America and 800,000 units in Europe this year, up to two years ahead of schedule, thanks to hot-selling cars like the Camry, Corolla and Avensis.

UBS analyst Takaki Nakanishi agreed Toyota's growth prospects looked good further out, particularly in the key North American market.

Referring to its plans to launch the all-new Camry and Corolla in 2005 and the new Tundra pickup truck the following year, he said: "We think this should set the stage for sustained growth (in the U.S.) over the longer term."

He added that profits could also improve in the United States, partly due to Toyota's spending less on consumer incentives, which have been eroding profits at the Big Three.

Shares in Toyota ended up 3.76 percent at 3,590 yen, slightly outperforming rival auto shares and compared with a rise of 0.57 percent in the broad Topix index.

A day earlier, domestic rival Honda Motor also forecast healthy growth, expecting global sales to jump 10 percent to 3.2 million units in 2004, which would mark a fifth straight record year.

Following is a breakdown of Toyota's forecasts:
2004 YEAR/YEAR GROUP
Global sales 7.08 mln +4 pct
Japan sales 2.36 mln +2 pct
Global output 7.28 mln +7 pct
PARENT Global sales 6.33 mln +4 pct
Japan sales 1.76 mln +2 pct
Global output 6.51 mln +7 pct