We knew the auto industry was in bad shape and it didn't take long to extend its poisoned-tipped tentacles into the world's automotive juggernaut. In August came news that the Japanese automaker had cut its sales forecast for 2008 from 10.4 million vehicles to 9.7 million. A Japanese newspaper, though, says it expects Toyota to only sell 8.3 million for the year. If true, it would be the company's first year over year sales decline in a decade. The Nikkei Daily (subscription required) doesn't back up its prediction with any sources, but we'll know how close to the truth they get come in January when Toyota announces official sales numbers.
Further proof that no automaker is immune to effects of the sales downturn in the U.S. comes as Toyota has just announced 0% financing on 11 of its models, including the hugely popular Camry and Corolla and a slew of SUVs and trucks. Last month, incentive-averse Toyota posted a drop in sales of over 30% compared to a year ago and the rest of the year isn't expected to look much better. General Motors, which still posted a decline in sales, fared better than most of its rivals, including Toyota, thanks to aggressive incentives including its employee pricing for everyone. Toyota itself is calling the move to offer 0% financing "unprecedented," and indeed it is. Historically, the Japanese automaker has not needed to offer such sweeping deals to move its metal. It apparently has the cars, the means to finance them and just needs buyers. If you want in on the deal, it's available until November 3. See the full press release from Toyota for more details after the break
Last September we told you of Volkswagen's plan to overtake Toyota in global sales by 2015. Some Autoblog staffers giggled at the prospect. That was before Toyota reported a 39% drop in profit and began writing down leases, and long before today's news of the Japanese automaker reducing its sales goal for 2009 by almost 7%. Instead of the 10.4 million vehicle sales it predicted for 2009, Toyota says it now may only sell 9.7 million. While 7% may not sound like a big reduction, consider that Toyota has seen steady growth since its founding in 1934, and any drop is a big deal. Last month, Toyota reported an 18% drop in sales from last July, while VW posted a 4% drop. If those sales rates continue, VW's goal of total domination should be much easier to attain.
Toyota is not used to seeing its profit margins drop, as the Japanese auto giant has enjoyed increased profit for nine straight years. Expect that run to end this year, though, as Toyota is discovering that it is not immune to the downturn of the American auto market. For the year, Toyota has revised its sales forecast from 9.06 million units to an estimated 8.74 million. For the first quarter of the year that ended in June, Toyota has also announced that its operating profit took a 39% plunge from lower sales in both the United States and Europe, the increased value of the Yen and higher cost of raw materials. Oh, and then there's the pesky problems of leases. Still, Toyota sales remain fairly strong in this sinking market and a profit is a profit. We'd imagine that this is a problem any one of the Detroit 3 would love to have on its hands.
Toyota posted a 10% sales decline for its bread-and-butter brand of over the month of June, with numbers that are even worse -- an 11.5% drop -- when the Scion and Lexus brands are added into the equation. In response to these very un-Toyota-like sales declines, the automaker is now revamping its vehicle production in the States. Though it has already introduced measures to slow the production of full-size Tundra trucks and Sequoia SUVs, reports indicate the further cuts will be made at the San Antonio truck plant. The Indiana plant, which also produces Tundras, will see workers transferred to other lines where more popular vehicles are assembled. Even plants in Japan that export vehicles to the U.S. could be affected. Toyota is hardly used to seeing double-digit drops in sales in the U.S., so it will be interesting to see how the giant Japanese automaker responds in the months to come.
The current economic environment in the United States is hurting all auto makers these days, even mighty Toyota, which was once considered immune to so-called market realities. Though its overall performance last year would be considered a stellar achievement for any other automaker, Toyota's 28% profit plunge in the fourth quarter of 2007 points to an expected 27% drop in annual profits in 2008. If Toyota's revised forecast proves accurate, 2008 would break a nine-year stretch of profit growth. In addition to the slowing U.S. market, Toyota also cites high material prices, the worldwide credit crunch and a strong yen as contributing factors in its mild downturn.
Toyota's expected profit drop is certainly newsworthy, but we just have to wonder how the money-losing American car companies will cope in the U.S. market with the same issues. While sales of cars are gaining strength, the SUV and truck markets are sinking with what could be Titanic-like implications for the truck-heavy lines from Ford, Chrysler and GM.
Both General Motors and Toyota have released their global sales figures for the first quarter of 2008, and for those who like to keep tabs on which automaker is the biggest in the world when it comes to sales, we have new news. The last time we convened for this discussion, both GM and Toyota were in a dead heat for the title of World's Best-Selling Automaker in 2007, though GM was eventually found to have sold more by the slimmest of margins. It seems that this time Toyota has firmly taken the lead in Q1 2008, selling 2.41 million vehicles worldwide to GM's 2.25 million. The Detroit News notes that Toyota also outsold GM in Q1 2007 before GM went on to win the year outright, which just goes to show that things can change over the next nine months. GM is actually enjoying record sales outside of the U.S. in the Asia Pacific region, Europe and Latin American, Africa and the Middle East. Its own domestic market is what continues to drag down GM's numbers, with sales off 10% in the U.S. through March. Sales in the U.S. for Toyota through March were also down, but only by 4.4%. We reiterate like we always do when talk of this global sales crown comes up – it means very little in the grand scheme of things who sells more cars globally. But titles like this can be used to good effect in marketing and for bolstering an automaker's internal morale, so don't expect either one to admit they don't want the mantle of World's Best-Selling Automaker.
With Toyota reporting its daily average sales rate fell 6.6 percent last month, it might be easy to think the retirement of nine U.S. executives is a sign that the company is getting ready for a new start. But at least one analyst thinks something else might be happening. Head hunting.
Toyota's February sales drop was nearly as bad as some other automakers, and these nine retirees could be more defectors lured away by other carmakers desperate to salvage their businesses. At least two of the retiring employees have more than 30 years experience with one of the world's most successful companies. Their talents and knowledge would be quite attractive. Hey, it's happened before.
So keep an eye out for these guys to possibly pop up again soon as new hires, like Dave Illingworth, Toyota Motor Sales' senior vice president and chief administrator. He had been with the company for 30 years. Also leaving are 37-year-employee Alan DeCarr, group V.P. and general manager of Toyota Logistics Services; and, after 21 years with Toyota, Jim Aust, VP for motorsports and president of Toyota Racing Development is out, as well.
We'll soon need Florida's State Supreme Court to step in and decide this one, as Automotive News is reversing on its report yesterday that General Motors had outsold Toyota globally in 2007 to declare Toyota the winner today. To be fair, yesterday's report that GM had outsold Toyota was based on a Reuters source who claimed the Japanese automaker had sold 9.366 million vehicles in 2007 to GM's 9,369,524 vehicles. Toyota, however, is not scheduled to reveal the exact number of vehicles it sold worldwide in 2007 until later this month.
Regardless of the exact number of vehicles Toyota says it sold last year, Automotive News is declaring it the World's Largest Automaker in 2007 based on the fact that GM included some 516,435 sales from the Chinese Wuling brand. GM only owns 34 percent of Wuling, the majority of which is owned by SAIC. Normally automakers don't report sales for brands in which they don't own a majority interest (that's why Mazda sales are not reported by Ford), and in this case Automotive News is subtracting Wuling sales from GM's total, which drops it down to 8,885,599 units. Toyota's easily got that beat regardless of the exact figure it eventually reports.
From the cheap seats, we can't tell you how much either automaker really cares if it's crowned the World's Largest Automaker in 2007. Nor can we say whether GM including sales figures for a brand that it technically doesn't own is a deliberate play on their part or something completely innocuous and not worth reading into. We'll leave that up to you.
