Despite a record profit of $13.8 billion profit in fiscal 2007,Toyota executives said they expected the pace of growth to slow, perhaps dramatically, this year.
President Katsuaki Watanabe told journalists in Tokyo that the market in the U.S. was very difficult right now. The comments indicated that Toyota, which is now predicting a sales increase of only 1.6 percent in North America during the coming fiscal year, is bracing for a sharp slowdown in new vehicles sales in what has been consistently one of its strongest markets over the past decade.
Higher gas prices, a housing slump, and a slowing economy are slowing consumer spending, Toyota officials said. Toyota also announced plans to buy back more than eleven million shares of its own stock before the end of May.
"People are worried about the U.S. outlook,'' said Naoki Fujiwara, who oversees $720 million at Shinkin Asset Management Co. in Tokyo. He told Bloomberg News, "It's difficult to put a premium on the stock price.''
Watanabe, however, said Toyota will continue to invest in new plants and new models to prepare for future growth. Toyota beat General Motors in worldwide vehicle production and sales in the first quarter for the first time ever.
During the same quarter, Toyota said its earnings climbed nine percent to $3.67 billion, while revenues increased by ten percent to $52 billion. The profitability of Toyota's two principal Japanese rivals, Honda and Nissan, declined during the same period, underscoring Toyota's growing dominance in its home market.
Toyota predicted profits would increase only 0.4 percent for the fiscal year through March 2008, which would be the smallest improvement for the company since seeing its profits slip in the fiscal year ending March 2002.
Toyota is projecting profit for the fiscal year through March 2008 at $13.8 billion, only slightly better than the $13.7 billion for the fiscal year that ended March 31, when it lifted profit by a robust 20 percent from the previous year.
Toyota is expecting sales for the fiscal year through March 2008 at 25 trillion yen or $209 billion, up 4.4 percent from fiscal year 2006. Sales jumped 14 percent to 23.9 trillion yen ($199.5 billion) in the fiscal year that ended March 31.Toyota also expects to sell 8.89 million vehicles, up four percent from 8.5 million in the fiscal year that just ended.
The automaker's sales have been surging, especially in North America and Europe, as soaring gas prices boost the appeal of its models, including gas-electric hybrids like the Prius.
Toyota said its group production totaled 2.37 million vehicles globally in the quarter through March, slightly more than the 2.34 million vehicles that GM said it produced around the world for the same period.
Meanwhile, Watanabe declined to make much of overtaking General Motors during the first quarter. "Rather than think about other companies, I feel that we must do our utmost to satisfy customers around the world," he said, according to wire service reports.
"There is plenty left for us to do," he told reporters, echoing comments he had made during a brief visit to Detroit last month. He said he was worried about his workers becoming smug and stressed that he aims to boost sales in "every region" around the world.
"We aren't just chasing numbers," he told reporters at a Tokyo hotel. "We must continue to pursue better quality."