Toyota Plans to Boost Japan Exports to Hit Global Target

Updated on

Toyota Motor Corp., facing capacity constraints in North America, may boost exports from Japan for the first time in three years to meet its global sales target.

Weak sales in resource-rich and emerging countries have made it “very difficult” to meet Toyota’s 2015 target, Managing Officer Yoichi Miyazaki said last month, according to a newsletter by the company’s labor union. Toyota must make up for the shortfall by boosting sales in developed markets, he said, asking for the cooperation of the company’s Japanese workers in handling the increased workload.

“Whenever there is a letter from the management to labor, the outlook is always ultra conservative,” Koji Endo, an auto analyst at Advanced Research Japan, said by phone. “Compared to the very conservative numbers that management has been giving to the union, the actual number is probably going to be better.”

Toyota declined 0.7 percent to 8,470 yen at the close in Tokyo trading. Japan’s benchmark Topix index fell 0.4 percent.

While Miyazaki didn’t identify specific countries in the letter, Toyota last month forecast stronger sales in North America will be tempered by weaker demand from Russia and the Middle East, due to plunging oil prices. Kayo Doi, a Toyota spokeswoman, confirmed the contents of the newsletter, issued June 1, and declined to comment further.

Weaker Yen

Even if Toyota boosts exports in the months ahead, it would have to overcome a 3.3 percent decline this year through April to have its first-full year gain since 2012. The company trimmed overseas shipments by 5.8 percent last year and 2.4 percent in 2013, despite policies introduced by Prime Minister Shinzo Abe that weakened the yen with the aim of boosting exporters and stimulating Japan’s economy.

Toyota has been approaching the limits of its production capacity in North America, leading the company to build a new factory in Mexico. Still, that plant won’t begin producing Corolla compacts until 2019.

In May, Toyota’s U.S. sales slipped 0.3 percent, the first monthly decline since February 2014. Jim Lentz, chief executive officer of Toyota North America, said in January the company would turn to Japan for more supply of models including the RAV4 and Lexus RX to keep up with booming U.S. demand for SUVs.

(Updates with closing shares in fourth paragraph.)
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