Toyota: Sales expansion planned for North America and Asia

 Reported below are Toyota Motor Corporation's expansion plans for North America and Asia (especially Thailand and Indonesia). Upward amendments to full-year financial forecasts for FY2012, announced with the financial results for April to December 2012, will also be focused.

 Toyota's consolidated sales volume for FY2012 is expected to increase by 1.5 million units from 7.35 million units in FY2011 to 8.85 million units. Of the 1.5 million additional units, 580,000 units will be in North America and 380,000 units in Asian markets other than China.

 As for North American markets, Toyota sold 2.08 million vehicles in the United States in 2012 securing 14.4% of the market. Toyota plans to sell 2.2 million vehicles in 2013. Its production in North America in 2012 was 1.77 million vehicles, the highest ever for the area. The company plans to increase capacity by 130,000 vehicles by the start of 2014, and to receive supply of 50,000 units of small-size cars from Mazda's plant in Mexico starting in the summer of 2015. Toyota has been increasing exports from the United States and exported 124,000 units in 2012.

 Asia is contributing as Toyota's prime source of earnings in the past few years. Asia topped in Toyota's operating income by the region at 286.3 billion yen in April to December 2012.

 In 2012, Toyota produced 890,000 vehicles in Thailand (the past record was 630,000 vehicles in 2010) with normal 2-shift capacity of 670,000 vehicles. The company announced plans to increase capacity to 1 million vehicles in the near future (announced in November 2012). In mid-2013, Toyota will begin production of a Thai version of eco-cars at the second Gateway Plant currently under construction. In 2015, Toyota will release for sale the next IMV family.

 As for Indonesia, Toyota and Daihatsu will have production capacities for 250,000 vehicles and 450,000 vehicles, respectively, in 2014. Plans were announced for six of the Toyota group companies to invest a total of 13 trillion Indonesian rupiah (143 billion yen at the exchange rate prevailing in mid-February 2013) in the next five years (announced in November 2012).

 Toyota was to produce a small-size car (reportedly based on the Etios) starting in early 2013 and Daihatsu was to produce Daihatsu Ayla and Toyota Agya at the end of 2012 in line with the Indonesian government's Low Cost Green Car (LCGC) initiative. However, there has been no official announcement made by the Indonesian government as of mid-February 2013 and the planned production has not started yet.

 Toyota's consolidated financial forecasts for operating income in FY2012 announced in February contained an upward amendment by 100 billion yen, from the forecast made in November 2012, to 1,150 billion yen. Toyota's new unconsolidated forecast contains an operating profit of 150 billion yen, highest ever since FY2008. The forecasts are made using prudent exchange rates of 84 yen to the dollar and 110 yen to the euro for the January-March 2013 period and further upward amendments are likely to be made (the exchange rate in mid-February fluctuated between 90 and 95 yen to the dollar).

Related reports:
Toyota's sales and earnings are in full-scale recovery (posted January 2013)
Toyota increases production capacities in North America and emerging markets (posted May 2012)

 Toyota's consolidated sales volume is expected to increase by 1.5 million vehicles from 7.35 million vehicles in FY2011 to 8.85 million vehicles in FY2012. Toyota plans to sell a total of 960,000 vehicles more in two regions, including 580,000 units more in North America and 380,000 units more in Asian markets other than China.

 These two regions are also contributing to Toyota's earnings. Asia, in particular, outperformed North America to become the prime source of earnings in FY2009, FY2011, and April-December FY2012.

Source: Toyota's financial results for April-December FY2012
(Note) Sales of local production in China are not included. This also applies to the operating income by the region below. The consolidated sales volume for FY2011 includes 8,000 vehicles sold in other regions.

Source: Toyota's financial results

 Toyota's sales volume in the United States registered 2.62 million vehicles in 2007 with the market share of 16.2%. However, the sales fell to 1.64 million vehicles in 2011 with the market share of 12.9% due to global recessions, large-scale recalls, Great East Japan Earthquake disaster and floods in Thailand.

 Production gathered momentum in 2012 and Toyota sold 2.08 million vehicles with a market share of 14.4%. The Camry, the best-selling car in the United States for eleven years in a row, topped the 400,000 vehicles mark in 2012 for the first time in four years.

 The light vehicle market in the United States is expected to expand from 14.5 million vehicles in 2012 to 15 million vehicles in 2013.

 Toyota is renewing many of its mass-produced cars in less than a year's span after December 2012. Toyota launched the new Avalon in December 2012 and the new RAV4 in January 2013 (targeting 200,000 vehicles a year), and will introduce the new Highlander and the new Tundra in the second quarter and the new Corolla (based on the Furia concept exhibited at the Detroit Auto Show in January 2013) in the third quarter. All in all, Toyota plans to sell 2.2 million vehicles in total in the United States in 2013.

Sales volume in the United States by the brand and leading models

Source: Automotive News 2013.1.7

Record-high production of 1.77 million vehicles in North America in 2012, planning additional supply capacity for 180,000 vehicles

 In 2012, Toyota produced 1.77 million vehicles in North America (US, Canada, Mexico), a record high number topping the last peak quantity of 1.67 million vehicles in 2007.

 To stand ready for the new momentum of sales, Toyota is increasing its production capacity by 130,000 vehicles in total by the start of 2014, including 50,000 units (Highlanders) at Indiana Plant, 50,000 units (RAV4) at Woodstock Plant, Canada, and 30,000 units (Lexus RX) at Cambridge Plant, Canada. Toyota plans to receive supply of 50,000 small-size cars from Mazda's plant in Mexico starting in the summer of 2015.

 Of the Toyota vehicles sold in the United States, the ratio of those produced in North America rose from 55.1% in 2007 to 70.4% in 2012 while the number of Japanese car imports decreased by half from 1.18 million to only 620,000 units in the same period. In light of Toyota's increased production capacity in North America as reported above, import of the Highlander from Japan will end in 2013 and most of the new RAV4, launched in January 2013, will be produced at Woodstock Plant, Canada. Toyota was exporting 20,000 to 30,000 units of Lexus RX annually in the past few years but this will end in 2013.

Quantities and the ratio of local production and imports in Toyota's sales in the US

Source: Automotive News 2013.1.7
(Note) Local productions are those produced in the US, Canada and Mexico.

124,000 US-made vehicles exported in 2012

 Toyota exports its US-made vehicles to 21 countries including Canada and Mexico. The export quantity increased from 85,000 units in 2011 to 124,000 units in 2012. Toyota is exporting the US-made Siena minivan, Camry and Camry HV to South Korea under FTA arrangements with the United States. Export of the Venza, a crossover SUV, to South Korea began in 2012. Toyota plans to export the Venza to China as well starting in 2013.

 Starting in the second half of 2013, part of the additional production of the Highlander at Indiana Plant will be exported to Australia and Russia (production of the export-only vehicles at Kyushu Plant in Japan will be transferred to Indiana Plant).

 The domestic market in Thailand has recovered from the floods of 2011 and total automobile sales in Thailand expanded 1.8-folds from the results in 2011 to 1.42 million vehicles in 2012. Production rose by approximately 1 million vehicles to 2.45 million vehicles.

 Toyota produced approximately 887,000 vehicles in Thailand in 2012 (the past peak year was 2010 with 630,000 vehicles) and sold 530,000 vehicles (326,000 vehicles sold in 2010). The production volume by far exceeded the company's normal two-shift capacity of 670,000 vehicles and the plants had to work extra hours (holidays and overtime). When Thai Auto Works starts operation at the end of 2012 and production starts at the second Gateway Plant in mid-2013, Toyota's total capacity will increase to 760,000 vehicles.

 At the ceremony held in November 2012 to celebrate the 50th anniversary of Toyota Motor Thailand Co., Ltd., Toyota expressed plans to increase its production capacity in Thailand to 1 million vehicles in the near future.

Launching a new compact car in 2013, the next IMV model in 2015

 As of February 2013, Thai Toyota is producing the Hilux pickup truck and the Fortuner SUV in the IMV series, and the Camry, the Vios and other passenger cars.

 The second Gateway Plant will produce a new compact car (a Thai version of eco-cars) when it is completed in mid-2013.

 The IMV series first launched in 2004 is mainly produced in Thailand, Indonesia, South Africa and Argentina, and the cumulative global sales of the IMV series reached 5 million units in April 2012. An all-new series is expected for launch in 2015. Toward that goal, Toyota will invest 40 billion yen in its diesel engine plant in Thailand and nearly double the capacity from 320,000 to 610,000 engines.

Source: Figures for 2007-2011 taken from Toyota's website, figures for 2012 taken from MarkLines Data Center.
(Note) People in Thailand buying a small-size passenger car or a pickup truck for the first time between October 2011 and December 2012 were entitled to a refund of the commodity tax from the purchase. This privilege will end in 2013 and the total demand is expected to decline to 1.2 million vehicles (down 15% from 2012).

Production bases in Thailand, product lineup and production capacity (as of mid-2013)

Increasing engine production capacity in Thailand

 Indonesia is the fourth most highly populated country with 240 million people but the diffusion rate of motor vehicles is low, which means Indonesia has a great potential of growth.

 In 2012, Toyota enjoyed a market share of 36%, or more than 50% including Daihatsu vehicles, in Indonesia. The main contributors there have been the small-size minivan, Toyota Avanza and Daihatsu Xenia, and IMV series minivan Innova.

 Daihatsu's Sunter Plant is producing Toyota's Avanza on OEM arrangement to support its sales in Indonesia.

 In November 2012, Toyota and five other member companies of the Toyota Group (Toyota Auto Body, Toyota Tsusho, Aisin Seiki, Denso and Daihatsu) announced plans to invest 13 trillion rupiah in total over the next five years (100 rupiah converts to approximately 1.1 yen as of mid-February 2013).

Toyota and Daihatsu to increase capacities to 250,000 vehicles and 450,000 vehicles, respectively, in 2014

 Toyota's initial plan was to build the second plant in Karawang and to start production of the new small-size cars at start of 2013 with the initial quantity of 70,000 units a year. Toyota also has a plan to increase the annual capacity at the second plant to 120,000 units in early 2014, and also increase the capacity of the existing first plant from 110,000 to 130,000 vehicles, totaling 250,000 vehicles.

 Daihatsu has Sunter Plant in Indonesia having an annual capacity of 330,000 vehicles (normal 2-shift operation). In October 2012, Daihatsu completed construction of its Karawang Plant having an annual capacity of 120,000 units for producing small-size cars under the Indonesian government's eco-car initiative, namely the Daihatsu Ayla and Toyota Agya. The new production capacity at the two plants combined is 450,000 vehicles in normal 2-shift operation but it can be increased to more than 500,000 vehicles by overtime and holiday work.

 However, the Indonesian government has not yet announced the eco-car initiative as of mid-February 2013 and Daihatsu is unable to start production of the eco-cars at Karawang Plant. Under the circumstances, Daihatsu has started producing Daihatsu Xenia and Toyota Avanza that are enjoying brisk sales.

 Likewise, the second plant at Toyota's Karawang Plant was to produce its eco-cars (reportedly based on the Etios) other than the Agya to be supplied by Daihatsu starting early 2013. But the actual start of production has not been announced.

Toyota's production bases in Indonesia

Daihatsu's production bases in Indonesia

Toyota Agya and Daihatsu Ayla developed by Daihatsu

 On February 5, 2013, Toyota announced its financial results for the period from April to December FY2012, and the full-year financial forecasts for FY2012. The forecasts reflected amendments to the full-year foreign exchange rate from 79 yen to the dollar used in the forecasts published in November to 81 yen to the dollar. At the same time, the consolidated vehicle sales volume was increased by 100,000 units and the full-year consolidated operating income was amended to 1,150 billion yen (up by 100 billion yen from the November announcement).

 Toyota also announced the unconsolidated operating income forecast of 150 billion yen in profit (upward amendment by 170 billion yen from the November announcement). The forecasts were amended upward mainly because of the cost improvement efforts in the past several years and the yen's depreciation in the past 1 to 2 months that contributed to a significant increase in profitability from exports. It has been reported that Toyota has got a fix on its radical reform after the Lehman Brothers crisis.

 Although profitability in automobile exports is improving, Toyota is making continued efforts toward localization of overseas operations for sake of more stable profitability. Toyota will keep the current domestic production level of 3 million vehicles but says that the production models will change drastically.

 Toyota is rather prudent in assuming the foreign exchange rate of 84 yen to the dollar and 110 yen to euro for the period from January to March 2013. Toyota may announce further amendments to its operating income if the yen's depreciation continues at the level of 90 yen or more to the dollar which prevailed in mid-February.

Upward amendments to the consolidated financial forecasts for FY2012

Amendments to unconsolidated financial forecasts for FY2012

Source: Toyota and Daihatsu's Press Releases, newspaper reports

LMC Automotive forecasted that 2013 Toyota Group’s light vehicle production will increase by 0.2% over last year to about 9,528,000 units (February, 2013). Toyota’s production in Japan will decrease by nearly 7%, whereas its production in US, Thailand, Brazil, UK, Russia, and Indonesia will increase. LMC Automotive sees some upside risk to the Japan forecast in light of the possible improvements in the Japanese domestic economy and the positive impact of the yen devaluation on export competitiveness.

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