Bright outlook for 2012, according to Toyota

The automotive industry outlook for 2012 is extremely rosy, according to Toyota. Not only is Toyota shrugging off the collapsing Euro zone and the strong Yen that is hurting export earnings of Japanese companies (Toyota included), the company is expecting a whopping double digit increase in both domestic Japanese and overseas sales. Historically, Toyota’s forecast is quite reliable. Compared to brash American companies who tend to be overly optimistic to please shareholders in the short term, Toyota tends to be more conservative. Probably they know something that the rest of us don’t.

For the calendar year ending 31-December 2011, Toyota is forecasting a 6% drop in total worldwide sales, with Toyota’s domestic Japanese operations dropping 19%. Obviously this was attributed to production disruptions caused by Japan’s March-2011 quake and November-2011 Thailand flood.

Despite the doom and gloom headlines at major business dailies, Toyota expects its total sales worldwide to increase by 20% (8.48 million units), and for its Japanese domestic sales to rebound by 28% (1.53 million vehicles) while overseas sales will increase by 19% (6.95 million vehicles). The numbers here includes Lexus and other Toyota brands, including Daihatsu and Hino. Forecast figures for Japanese sales includes kei minivehicles, which is traditionally excluded from Japan’s registration figures compiled by JAMA (Japan Automobile Manufacturers Association).

Toyota further added that the forecast numbers does not take into account the recently announced extension of tax breaks from the Japanese government for eco-friendly cars. Currently, buyers of petrol-electric hybrids like the Toyota Prius and Honda Insight and electric vehicles like the Nissan Leaf enjoy tax breaks of up to 150,000 yen. Originally the incentive plan is supposed to expire by April 2012, but following intensive lobbying by Japanese automakers for government intervention to revive the free-falling Japanese domestic car market and to address the strong Yen.

Commenting on its lobbying efforts, Toshiyuki Shiga, head of the Japan Automobile Manufacturers Association said at a press conference in November, “Our request isn’t only to reduce the tax burden, but it’s to combat the strong yen, prevent a hollowing out and maintain domestic production.” Finally in early December, Prime Minister Yoshihiko Noda agreed to extend the tax incentive until April 2015 and requested for an additional 300 billion yen from the national budget to be set aside for rebates of eco-friendly cars. Noda however, stopped short of agreeing to other requests submitted by JAMA, like to abolishing weight tax (which JAMA says is unfair to rural car buyers) and addressing the strong Yen.

Toyota finalized its forecast much earlier and thus the latest announcement was not factored in. In other words, actual figures could be much higher.

For calendar year 2013, Toyota is forecasting an even higher 8.95 million units in total worldwide sales (5.5% higher than CY2012 forecast).

However take note that, these are forecast for sales and not earnings, which is an entirely different story altogether since not much has been done so far to address the strong Yen.